NEW ZEALAND INDEPENDENT COMMUNITY PHARMACY GROUP v TE WHATU ORA [2023] NZHC 1486

NEW ZEALAND INDEPENDENT COMMUNITY PHARMACY GROUP v TE WHATU ORA [2023] NZHC1486 [15 June 2023]IN THE HIGH COURT OF NEW ZEALANDWELLINGTON REGISTRYI TE KŌTI MATUA O AOTEAROATE WHANGANUI-A-TARA ROHECIV-2022-485-11[2023] NZHC 1486UNDER the Judicial Review Procedure Act 2016, theDeclaratory Judgments Act 1908 and Parts18 and 30 of the High Court Rules 2016IN THE MATTER OF an application for judicial review and anapplication for declaratory relief under theDeclaratory Judgments Act 1908BETWEEN NEW ZEALAND INDEPENDENTCOMMUNITY PHARMACY GROUPApplicantAND TE WHATU ORA – HEALTH NEWZEALAND (formerly HUTT VALLEYDISTRICT HEALTH BOARD)First RespondentContinuedHearing: 21, 22 and 29 November 2022Counsel: R Kirkness, N Coates, M Harris and H Yang for the ApplicantD La Hood, S McCusker for Te Whatu Ora – HealthNew Zealand (formerly Hutt Valley District Health Board)S Bisley, J Maltby for Te Whatu Ora – Health New Zealand(formerly Hauora Tairāwhiti)R Schmidt-McCleave, A M Kerr for Ministry of HealthM Crotty, L Mau for RX No. 8 LimitedS McKechnie, B Clifford for Pharmacy Guild of New ZealandJudgment: 15 June 2023Reissued: 27 June 2023JUDGMENT OF GWYN J ContinuedHAUORA TAIRĀWHITISecond RespondentTHE MINISTRY OF HEALTHThird respondentCOUNTDOWN PHARMACY (GDL RXNO8 LTD)Fourth respondentTHE PHARMACY GUILD OF NEWZEALANDIntervenerTABLE OF CONTENTSIntroduction [1]Factual background [8]Medsafe licences [8]Pharmacy services [11]ICPSA [14]The parties [19]The ICPG [19]Hutt Valley District Health Board [20]Hauora Tairāwhiti [23]Te Whatu Ora [26]RX8 [27]Legal framework [29]Pre-1 July 2022 framework — NZPHDA [32]Pae Ora Act [50]Medicines Act 1981 [57]The ICPSAs [61]HVDHB enters into ICPSA with RX8 [61]Hauora Tairāwhiti's ICPSA with RX8 [83]Evidence [109]Admissibility of expert evidence [116]Discussion [127]Grounds of review [138]Are the decisions by HVDHB and Hauora Tairāwhiti reviewable? [143]Applicant's submissions [154]Statutory and policy setting [157]Nature of the body [162]Nature of the decision [163]The nature of the interest(s) affected [167]Discussion [170]Conclusion on scope of review [189]Specific grounds of review [194]Rationality — first, second and third grounds of review [195]"Correct question" [195]Te Tiriti [221]Discussion [236]Authority to make Treaty arguments [246]Monitoring [253]Discussion [263]Licence to operate a pharmacy — "effective control" [269]Medicines Act [270]RX8's ownership structure [273]The Ministry's decision [276]Submissions [283]Legislative history [297]Discussion [305]Conclusion [328]Costs [329]Addendum [330]Declaratory Judgments Act 1908 [330]Introduction[1] This is a challenge to the way in which the regulation of community pharmacyservices in New Zealand is carried out by the relevant public health bodies.[2] The applicant, the New Zealand Independent Community Pharmacy Group(ICPG), is a group of community pharmacists.[3] The applicant challenges the decision by the Ministry of Health (Medsafe) toissue licences under the Medicines Act 1981 to GDL Rx No 8 Limited (RX8) tooperate new pharmacies in Countdown stores in Gisborne and Wainuiomata. RX8 isa company associated with the Countdown Group.[4] The ICPG says the Ministry wrongly interpreted the Medicines Act provisionas to when a pharmacy licence can be granted to a company.[5] The applicant also challenges decisions by two District Health Boards (DHBs),Hutt Valley District Health Board (HVDHB) and Hauora Tairāwhiti, to grantIntegrated Community Pharmacy Services Agreements (ICPSAs) to RX8.[6] A key factor in the ICPG's challenge to the DHBs' decisions is that CountdownPharmacies discount the co-payment on funded prescription medicines. The ICPGalleges that HVDHB and Hauora Tairāwhiti failed to recognise the co-paymentdiscount as a loss-leading strategy and concluded that Countdown Pharmacies'marketing strategy was "pro-equity".[7] The applicant says that the failure to correctly identify the nature of the co-payment discount led to errors of law by the DHBs.Factual backgroundMedsafe licences[8] On 21 May 2020 RX8 applied to the Medicines Control branch of Medsafe,within the Ministry of Health, under the Medicines Act, for a licence to operate apharmacy at Countdown Pharmacy, Penrose. Medsafe assessed and approved theapplication. RX8 submitted further applications for licences to operate pharmacies,including in Wainuiomata and Gisborne, and Medsafe carried out licensing audits forthose premises. The licences were granted to Countdown Pharmacy Wainuiomata on11 May 2021 and to Countdown Pharmacy Gisborne on 22 May 2021.[9] Until 1 July 2022 HVDHB and Hauora Tairāwhiti were DHBs. DHBs wereCrown agents funded by the Ministry of Health to provide health and disabilityservices to the local population. They were established and governed by theNew Zealand Public Health and Disability Act 2000 (NZPHDA).[10] Subject to the national direction set by Government health policy, DHBs wereresponsible for deciding how the mix, level and quality of health and disabilityservices could be best delivered for their specific region.Pharmacy services[11] DHBs funded community pharmacy services to their local regions. In order todo so, they entered into service agreements with private pharmacies who in turnprovided pharmacy services in the community.[12] Most medicines in New Zealand are subsidised by the Government. Pharmacsets the price for the subsidised medicine. When a patient purchases subsidisedmedicine, the pharmacist will invoice Te Whatu Ora – Health New Zealand(previously, the relevant DHB) for the price of the medicine, plus a dispensing fee,minus a $5 pharmaceutical co-payment charge.[13] The pharmaceutical co-payment is an amount of money set by the Governmentthat the public pay towards the cost of medicines. Until 2013 the pharmaceutical co-payment was $3. In 2013, this was increased to $5. This sum is not received by thepharmacy, so when a pharmacy waives the $5 co-payment fee, the pharmacy isabsorbing that cost. There are no regulatory restrictions on pharmacies discounting orwaiving the co-payment.11 On 18 May 2023 the Government announced, as part of the 2023 Budget, that the co-paymentwould be waived with effect from 1 July 2023: New Zealand Government Wellbeing Budget 2023(18 May 2023) at 11.ICPSA[14] Since 2012 community pharmacy services had been provided under the"Community Pharmacy Services Agreement". DHBs funded pharmacies by referenceto how much medicine was actually dispensed. It was a one-size-fits-all approach,that largely funded all pharmacies to provide the same services.[15] In 2018 the DHBs, the Ministry and a number of representative bodies,including the Pharmacy Guild of New Zealand (Pharmacy Guild), negotiated the termsof a Standard National Service Agreement, the ICPSA, to fund the provision ofpharmacy services through community pharmacies. The ICPSA is a nationalisedservices agreement for the funding and provision of integrated community pharmacyservices and was used by all DHBs.[16] The ICPSA is reviewed every year by stakeholders. It sets out generic serviceand quality requirements in general terms that apply in respect of services providedunder it and provides the basis for funding. The specific services of the pharmacy (forexample, dispensing and professional advisory services) are attached to the ICPSA asschedules.[17] Until the DHBs were disestablished in July 2022, the ICPSA was a bilateralcontract between a DHB and a pharmacy. The pharmacy was obliged to provideservices to eligible patients as set out in the head agreement and service schedules.There were clear contractual provisions regarding standards of care, breach,termination and reporting. DHBs were able to vary the generic terms, for example toinclude contractual obligations in relation to pharmacy opening hours, wherenecessary or desirable.[18] There was no national policy or direction limiting a DHB's decision aboutwhether or not to enter into an ICPSA with a particular provider. DHBs were free todevelop their own policies and processes to address the needs in their own regions,including by adopting localised pharmacy strategies or contracting policies.The partiesThe ICPG[19] The ICPG, the applicant, is an incorporated society. It was established on9 November 2021 to represent and promote the interests of independent communitypharmacists and pharmacies in New Zealand.Hutt Valley District Health Board[20] The first respondent, HVDHB, provided health services for the Hutt Valley,including Wainuiomata. Wainuiomata is a community in a valley adjacent to the mainHutt Valley, which is linked by one access road over a steep hill. The total populationof Wainuiomata is approximately 19,410.2[21] Wainuiomata's population includes a high proportion of Māori, Pasifika, Asianand other ethnicities. As at the 2018 Census,3 in Wainuiomata, 30.4 per cent of thepopulation identified as Māori and 15.9 per cent identified as Pasifika, compared tothe wider Hutt Valley total population where 17.9 per cent identify as Māori and9.8 per cent as Pasifika.4[22] Wainuiomata is a region of high economic deprivation.5 Measures ofdeprivation are strongly linked with health or social outcomes and are therefore animportant part of health system analysis for identifying inequities in health outcomes.Hauora Tairāwhiti[23] Hauora Tairāwhiti, also a DHB, provided and funded health disability servicesin the geographical area of Te Tai Rāwhiti (Gisborne and East Cape District). Thetotal population of the Te Tai Rāwhiti region is approximately 52,000.6 Three-quarters2 Stats NZ Subnational population estimates (RC, SA2), by age and sex, at 30 June 1996-2022.3 Stats NZ Ethnic group (detailed single and combination) by age and sex, for the census usuallyresident population count, 2013 and 2018 Censuses (RC, TA, SA2, DHB).4 People can identify with more than one ethnicity.5 New Zealand Index of Deprivation NZDep2018 (2018); and see also June Atkinson, ClareSalmond and Peter Crampton NZDep2018 Index of Deprivation: Final Research Report(University of Otago, December 2020).6 Stats NZ, above n 2.of the population live in the city of Gisborne. That population is characterised by bothurban and highly rural communities and a large proportion of young people(39 per cent). Over 51 per cent of the population is Māori.7[24] Te Tai Rāwhiti has the highest level of deprivation in New Zealand in terms ofhealth. Te Tai Rāwhiti has:(a) the highest rates of overall avoidable mortality and morbidity inNew Zealand;(b) high rates of ambulatory sensitive hospitalisation;(c) high rates of smoking and obesity and of long-term conditions such asdiabetes, heart disease, arthritis and gout; and(d) relatively low immunisation rates.[25] Those factors mean there is high inequity in accessing health services in Te TaiRāwhiti which is exacerbated by secondary factors, such as lack of access to reliablevehicles, long work hours for those in the main employment sectors (agriculture,forestry and fishing) and poor internet connectivity.Te Whatu Ora[26] On 1 July 2022 the Pae Ora (Healthy Futures) Act 2022 (Pae Ora Act) cameinto force, disestablishing all DHBs and establishing Te Whatu Ora.RX8[27] There are currently 42 pharmacies operating within Countdown stores inNew Zealand (Countdown Pharmacies).8 Countdown Pharmacies are operated byentities within the Woolworths New Zealand Ltd group of companies, including RX8.7 Stats NZ, above n 3.8 On 14 March 2023 — after the hearing, but before completion of this judgment — the first andsecond respondents advised that the ICPSA between Hauora Tairāwhiti and RX8 had beenterminated.RX8 is the party to the IPSCAs for the Countdown Pharmacies in Wainuiomata andGisborne. RX8's corporate structure is discussed in relation to the sixth ground ofreview below.[28] The intervener, the Pharmacy Guild, is the largest membership organisation inthe community pharmacy sector in New Zealand. It represents approximately 600members across New Zealand; in Tairāwhiti it has six members and in the Hutt Valleyit has 19 members. It provides a range of support and services to community pharmacyowners. The Pharmacy Guild acted as the representative of its members in theircontractual discussions with DHBs for the ICPSA.Legal framework[29] In between the filing and hearing of this application for review, significantlegislative change occurred in the New Zealand health sector. As noted, on 1 July2022 the Pae Ora Act repealed the NZPHDA and replaced DHBs with Te Whatu Ora.[30] While the application for judicial review concerns the pre-1 July 2022 legalframework which applied when HVDHB and Hauora Tairāwhiti entered into ICPSAswith RX8, the ICPG also seeks general declaratory orders relating to both theNZPHDA and the Pae Ora Act, under the Declaratory Judgments Act 1908.[31] For that reason, it is necessary to set out both legislative frameworks.Pre-1 July 2022 framework — NZPHDA[32] The NZPHDA took effect from 1 January 2001. The purpose of the NZPHDAwas to provide for the public funding and provision of health and disability servicesand to establish new publicly owned health and disability organisations, in order topursue the objectives set out in s 3. Those objectives included:(a) To achieve for New Zealanders the improvement, promotion andprotection of their health.(b) To reduce health disparities by improving the health outcomes of Māoriand other population groups.(c) To provide a community voice in matters relating to personal healthservices, public health services and disability support services, byproviding for elected board members of DHBs, board meetings andcertain committee meetings to be open to the public, and consultationon strategic planning.[33] Section 4 of the NZPHDA stated that, in order to recognise and respect theprinciples of the Treaty of Waitangi, and with a view to improving health outcomesfor Māori, pt 3 provided mechanisms to enable Māori to contribute to decision-makingon, and to participate in the delivery of, health and disability services.[34] Part 3 established and provided for DHBs. Each geographical area inNew Zealand had a DHB that was responsible for funding and providing healthservices to the resident population in that area.9[35] DHBs were Crown entities, governed by the Crown Entities Act 2004 (CEA),except to the extent that the NZPHDA expressly provided otherwise.10 Specifically,DHBs were statutory entities and Crown agents under the CEA.11[36] As statutory entities, DHBs were required to act consistently with theirobjectives in performing their statutory functions.12 A DHB could do anythingauthorised by the NZPHDA or the CEA,13 and anything that a person of full age andcapacity may do,14 as long as it acted only for the purpose of fulfilling its functions.15[37] As Crown agents, DHBs were required to give effect to government policywhen directed by the responsible minister (Minister of Health). The role of the9 New Zealand Public Health and Disability Act 2000 [NZPHDA], sch 1.10 Section 21.11 Crown Entities Act 2004 [CEA], sch 1, pt 1.12 Section 14.13 Section 16.14 Section 17.15 Section 18.Minister was to oversee and manage the Crown's interests in, and relationships with,DHBs, and to exercise any statutory responsibilities.16[38] DHBs had broad objectives in relation to their resident populations.17 Theseincluded to:(a) Improve, promote, and protect the health of people in the community.(b) Seek the optimum arrangement for the most effective and efficientdelivery of health services in order to meet local, regional, and nationalneeds.(c) Reduce health disparities by improving health outcomes for Māori andother population groups.(d) Reduce, with a view to eliminating, health outcome disparities betweenvarious population groups within New Zealand by developing andimplementing, in consultation with the groups concerned, services andprogrammes designed to raise their health outcomes for those and otherNew Zealanders.[39] Each DHB was required to pursue its objectives in accordance with any annualplan prepared under s 38, its statement of intent, and any directions or requirementsgiven to it by the Minister under the NZPHDA or the CEA.18[40] Section 23 set out the functions of each DHB for the purpose of pursuing itsobjectives. These included to:(a) Ensure the provision of services for its resident population and for otherpeople as specified in its Crown funding agreement.16 Section 27.17 NZPHDA, s 22(1).18 Section 22(2).(b) Establish and maintain processes to enable Māori to participate in, andcontribute to, strategies for Māori health improvement.(c) Continue to foster the development of Māori capacity for participatingin the health and disability sector and for providing for the needs ofMāori.(d) Monitor the delivery and performance of services by it and by personsengaged by it to provide or arrange for the provision of services.[41] The Minister of Health could give directions to DHBs,19 or require theprovision of services.20[42] Every year DHBs had to submit an annual plan to the Minister for approval.The annual plan was to set out each DHB's plan to meet local, regional and nationalneeds for health services.[43] Under the NZPHDA, health services were funded and provided pursuant toservice agreements between DHBs and health service providers.[44] Section 25 authorised DHBs to enter into service agreements. A DHB could,if permitted to do so by its annual plan and in accordance with that plan, negotiate andenter into service agreements containing any terms and conditions that may beagreed.21 A DHB that had entered into a service agreement was required to monitorthe performance under that agreement of the other parties to that agreement.22[45] Each DHB was governed by its board.23 The board had the authority, in theDHB's name, to exercise the powers and perform the functions of the DHB.24 Alldecisions relating to the operation of the DHB had to be made by, or under the19 Section 32.20 Section 33.21 Section 25(1).22 Section 25(2).23 Section 26; and CEA, s 25.24 CEA, s 25(1).authority of, the Board in accordance with the CEA and the NZPHDA.25 For example,the board had to ensure that the DHB:(a) Acted in a manner consistent with its objectives and functions, annualplan, and any Ministerial directions.26(b) Performed its functions efficiently and effectively and in a mannerconsistent with the spirit of service to the public.27(c) Operated in a financially responsible manner.28[46] Each DHB board consisted of seven elected members and up to four membersappointed by the Minister.29 The Minister was required to ensure Māori membershipof the board was proportional to the number of Māori in the DHB's resident populationand that, in any event, there were at least two Māori members.30[47] The Minister had the power to appoint persons to sit on boards as Crownmonitors, if the Minister considered it would be desirable to do so for the purpose ofassisting and improving the performance of the DHB.31[48] If the Minister was seriously dissatisfied with the performance of a board of aDHB, the Minister could dismiss all members of the board and replace the board witha commissioner.32 In addition, the Minister could, at any time and entirely at his orher discretion, remove an appointed member of a DHB,33 or an elected member, for areason specified in cl 9 of sch 3.3425 Section 25(2).26 NZPHDA, s 27.27 CEA, s 50.28 NZPHDA, s 41; and CEA, s 51.29 NZPHDA, s 29.30 Section 29.31 Section 30.32 Section 31(1).33 Schedule 3, cl 8(1AA), in accordance with s 36 of the CEA.34 NZPHDA, sch 3, cls 8(1)(b) and 9.[49] All DHBs were also required to have a community and public health advisorycommittee, a disability support advisory committee and a hospital advisorycommittee.35Pae Ora Act[50] On 1 July 2022, the Pae Ora Act repealed and replaced the NZPHDA. Thepurpose of the Pae Ora Act is to provide for the public funding and provision ofservices to achieve the objectives set out in s 3, which include achieving equity inhealth outcomes among New Zealand's population groups, including by striving toeliminate health disparities, particularly for Māori.[51] The Pae Ora Act created two new entities:(a) Te Whatu Ora as the national organisation to lead and co-ordinatedelivery of health services across the country.36 Te Whatu Ora is aCrown agent and subject to the CEA.37(b) Te Aka Whai Ora, an independent statutory Māori Health Authority,38to co-commission and plan services with Te Whatu Ora, commissionkaupapa Māori services and monitor the performance of the healthsystem for Māori.[52] At the same time, the Act disestablished all DHBs (including their boards andadvisory committees). The assets, liabilities, contracts and employees of DHBs havebeen transferred to Te Whatu Ora.39 Any act or omission of a former DHB is treatedas being done or omitted by Te Whatu Ora.40[53] Te Whatu Ora is governed by a board appointed in accordance with s 12. Thefunctions of Te Whatu Ora are set out in s 14 of the Pae Ora Act.41 One of the functions35 Sections 34–36.36 Pae Ora (Healthy Futures) Act 2022 [Pae Ora Act], s 11.37 Section 11.38 Section 17.39 Schedule 1, cl 10.40 Schedule 1, cl 10.41 Section 14.of Te Whatu Ora is to develop and implement commissioning frameworks and modelsfor the purpose of providing and arranging for the provision of services at a national,regional and local level.42 However, the Pae Ora Act does not include the equivalentof s 25 of the NZPHDA, providing for service agreements.[54] The Pae Ora Act provides for the Crown's intention to give effect to theprinciples of te Tiriti o Waitangi (the Treaty of Waitangi),43 including by establishingthe Māori Health Authority.[55] Section 7 of the Pae Ora Act contains a number of health principles,44 whichmust guide the exercise of statutory powers under the Act.[56] As a Crown entity, Te Whatu Ora has the general power under the CEA to doanything that a natural person of full age and capacity may do.45 That would includeentry into service agreements.Medicines Act 1981[57] The Medicines Act is also relevant as the sixth ground of review challenges theMinistry's decision to issue licences under the Act to RX8 to operate the Countdownpharmacies.[58] The Ministry of Health administers the Medicines Act. The Act regulatestherapeutic products and activities relating to therapeutic products, includingregulation of pharmacy practice activities in New Zealand through the PharmacyLicensing Framework.[59] Under the Medicines Act, no person shall in the course of any business carriedon by that person operate any pharmacy otherwise than in accordance with a licenceissued under pt 3 of the Act.46 Medsafe may issue a licence to operate a pharmacy ifit is satisfied that the statutory criteria are met.42 Section 14(1)(c) and (d).43 Section 6.44 Section 7.45 CEA, s 17(1).46 Medicines Act 1981, s 17(1)(d).[60] Licences are issued for one year and may then be renewed.47The ICPSAsHVDHB enters into ICPSA with RX8[61] From January 2020, HVDHB's Pharmacy Contracting Policy applied to anyrequests received by HVDHB for a new ICPSA.48 The Pharmacy Contracting Policyhas subsequently been amended in September 2020 and July 2021. The PharmacyContracting Policy sets out the process for applying for an ICPSA and mattersHVDHB would take into account when making decisions about new pharmacies.[62] The evidence of Rachel Haggerty, who was at relevant times Director, Strategy,Planning and Performance for both HVDHB and the Capital and Coast District HealthBoard, is that the purpose of the Pharmacy Contracting Policy was to enable HVDHBto make contracting decisions that would advance the objectives of the PharmacyAction Plan: 2016 to 202049 and HVDHB's five-year strategy for pharmacy servicesFuture Pharmacist Services.50[63] The Pharmacy Contracting Policy was also to give effect to HVDHB'sstatutory functions and objectives under the NZPHDA, including the obligation unders 22(1)(ba) to "seek the optimum arrangement for the most effective and efficientdelivery of health services in order to meet local needs".[64] Our Vision for Change 2017–202751 was a strategy developed to support andshape the direction and approach HVDHB would take over that 10-year period. It setout eight principles for decision-making to ensure that HVDHB was making goodinvestment decisions, including:52(a) Equity – our decisions will support the elimination of healthinequalities;47 Section 53.48 Hutt Valley District Health Board "Pharmacy Contracting Policy: Strategy, planning andoutcomes" (January 2020).49 Ministry of Health Pharmacy Action Plan: 2016 to 2020 (May 2016).50 Hutt Valley District Health Board Future Pharmacist Services 2018–2023: Our five year strategy.51 Hutt Valley District Health Board Our Vision for Change: How we will transform our healthsystem 2017–2027.52 At 8.(b) People-centred – our decisions will improve individuals and whānauexperiences of care and address what matters most to them;(c) Outcomes focused – our decisions will improve health outcomes andwellbeing for individuals and whānau;(d) Needs-focused – our decisions will be based on where the greatestneed lies;(h) Stewardship of resources – our decisions will ensure we get the bestvalue from our funding and carefully balance the benefits and costs ofour investments.[65] Our Vision for Change included the need for HVDHB to pay particularattention to the health needs and aspirations of the Māori population, to supportequitable opportunities for Māori to attain good health and well-being. The strategyalso placed an emphasis on improving the health outcomes for other populations withhigh health needs, including Pacific peoples, people with disabilities and those livingin poverty.[66] In 2018 HVDHB published Te Pae Amorangi53 which was HVDHB's MāoriHealth Strategy for 2018–2027. Te Pae Amorangi was intended to support theframework provided by Our Vision for Change, building on the eight decision-makingprinciples in Our Vision for Change, with guidance as to how to use those principleswhen considering Māori health and equity.[67] In 2018 HVDHB published its five-year strategy for pharmacy services, FuturePharmacist Services, developed to support the Our Vision for Change strategy. It setout the priorities for pharmacy service development. The key themes of FuturePharmacist Services included improving equity by channelling more resources to theDHB's priority populations. It also sought greater "[a]ccess to medication for prioritypopulations that meets their health needs"; "[m]ore focus on addressing equity, withmore targeted services to those whānau with social vulnerabilities"; and "[i]mprovedaccess to medication by reducing financial and other barriers" and "[b]etter access tohigh cost, low volume medication."53 Hutt Valley District Health Board Te Pae Amorangi: Hutt Valley DHB Māori Health Strategy 2018– 2027.[68] In accordance with the Pharmacy Contracting Policy an evaluation panel(Panel) was established to evaluate applications for an ICPSA. At the time theapplication for an ICPSA was received from RX8 the Panel was compromised ofHVDHB's Clinical Director of Primary and Integrated Care, its Chief Pharmacist, aMāori Health Representative, its Service Planning Integration Manager, and a Strategyand Planning Representative.[69] RX8 applied to HVDHB for an ICPSA on 24 July 2020. The applicationproposed opening a pharmacy at the Countdown Wainuiomata store, and proposed,amongst other things, opening hours from 9.00 am to 8.00 pm, Monday to Sunday andwaiver of the $5 co-payment fee.[70] The Panel assessed the RX8 application in accordance with the decision-making criteria set out in the Pharmacy Contracting Policy and made arecommendation to the Director, Strategy Planning and Performance, Ms Haggerty.[71] The decision-making criteria were set out in a matrix with a weighting for eachcriterion, as follows:Decision Making Criteria Weighting• Applicant information – Annual Practicing Certificate(including any conditions) and good characterinformation;Required• Pharmacy information – proposed location, proposedservices, opening hours, staffing FTE andqualifications;High• Proximity to other pharmacy services in the proposedlocation – what services, distance from proposed site,staffing;High• Alignment of the application with relevant national andlocal strategic priorities for pharmacy services (as perthe Policy Statement);Critical• The population needs in the proposed pharmacy'slocation, how are they being met at present, andwhether they will be enhanced by the proposedpharmacy;High• How the pharmacy will work with other providers(particularly local general practices) to ensureintegrated and continuity of care to patients;High• The support the applicant has from general practiceproviders in the area; Medium• The overall impact that approving the application mighthave on the provision of pharmacy and pharmacistservices;Medium• Any other matters that the DHB considers relevant toits assessment of the application. Medium[72] The Panel was convened on 25 August 2020 to consider RX8's application.Each of the Panel members completed the evaluation form. The Service PlanningIntegration Manager (Keith Fraser), Chief Pharmacist (Katrina Tandecki), SeniorService Development Manager (Russell Cooke) and General Practice Leader(Chris Masters) recommended against the application. They all agreed that RX8'sproposal to waive prescription fees and have extended opening hours wasadvantageous from an equity perspective. The majority of the Panel expressedconcerns about Countdown's staffing levels and its ability to provide services in anintegrated manner.[73] Mr Fraser noted that "equity (HRS + free scripts) is the greatest advantage butit fails on the other key elements", namely, releasing pharmacists from dispensing toenable patient and prescriber advice, and better managing medication information andcare plans. Mr Fraser noted it was a "tight decision given potential impact on equity".Ms Tandecki noted that the proposal to provide free prescriptions would advanceequity goals and would provide more choice for the local population, but queriedCountdown's intended staffing levels and recommended that the application bedeclined. Mr Cooke noted that the application presented a "difficult decision" and thatfree prescriptions were "an advantage to the population as are the extended hours".He also expressed concerns as to proposed staffing levels and recommended that theapplication be declined.[74] Mr Masters noted the proposal for longer hours would increase access butquestioned whether there was support from local GPs and the ability of Countdown towork in an integrated way. He also considered there to be a risk to the viability ofother pharmacies in the area. He recommended that the application be declined.[75] HVDHB's Acting Director of Māori Health, Kiri Waldegrave, recommendedthat the application be approved, on the basis that RX8's proposal to offer freeprescriptions and extended access had the potential to improve access in terms of costand hours of service.[76] On 10 September 2020 the Panel sent a memorandum to Ms Haggerty (whowas the decision-maker) recommending against the application on the basis that itspro-equity aspects did not outweigh the failure of the application to support otheraspects of the Pharmacy Contracting Policy. The memorandum noted the lowproposed level of staffing and therefore limited opportunity to free pharmacists fromthe supply function to focus on providing services. The opening of a CountdownPharmacy would detract from the ability of existing Wainuiomata pharmacies tooperate efficiently and effectively. The memorandum also noted that the proposals ofextended hours and zero co-payments had some attraction from an equity perspectivebut there were already some good hours at the existing pharmacies and arrangementsto enable financial access to medications.[77] On about 10 September 2020 Ms Haggerty met with Ms Waldegrave to discussRX8's application. Ms Waldegrave expressed her view that outcomes for Māori andhigher needs families had not been given adequate consideration by the majority ofthe Panel. She reiterated her view that the proposal by RX8 had the potential toincrease access to medicines for those in Wainuiomata.[78] On about 24 September 2020 Ms Haggerty convened a videoconference withall members of the Panel, where the advantages and disadvantages of Countdown'sproposal were discussed further.[79] Following that videoconference, Ms Haggerty considered the application.[80] On 23 October 2020 Ms Haggerty advised the Panel of her decision to approveRX8's application for Wainuiomata. Ms Haggerty acknowledged the concerns of themajority of the Panel, but in summary concluded that increasing free access topharmaceuticals in the Wainuiomata community, at no cost to the DHB, allowingpeople to collect scripts with ease of access and no financial barrier, outweighed therisks identified by the majority of the Panel.[81] On 3 November 2020 Ms Haggerty advised RX8 that the DHB had approvedan ICPSA for Countdown Wainuiomata. In doing so she noted that the key feature ofthe application was the "lower cost access and longer opening hours that will assistmore people to access their medications more easily" and that "Wainuiomata is an areawhere there are a number of people who will benefit from the service you willprovide."[82] HVDHB entered into an ICPSA with Countdown Wainuiomata in May 2021.Hauora Tairāwhiti's ICPSA with RX8[83] RX8 applied to Hauora Tairāwhiti for an ICPSA in August 2020. It proposedto open a pharmacy in Countdown Gisborne that would, among other things:(a) be open from 9.00 am to 8.00 pm, seven days per week; and(b) waive the $5 pharmaceutical co-payment.[84] At that time, Hauora Tairāwhiti was in the process of developing a pharmacystrategy to guide decisions about whether or not to approve ICPSAs to new or existingproviders. While that strategy was being developed, applications for an ICPSA wereconsidered by applying the "New and Existing Provider Policy" (Provider Policy), apolicy used by Hauora Tairāwhiti to assess all applications for service agreements,including ICPSAs, and its existing processes.[85] Ariana Roberts was at the time a Portfolio Manager at Hauora Tairāwhiti. Inaccordance with the Provider Policy, Ms Roberts sent RX8 a "Provider AssessmentForm" setting out the criteria against which the application would be assessed and theinformation required from RX8.[86] Having reviewed the information provided by RX8 in the first instance,Ms Roberts sought additional information about RX8's vulnerable child policy andhow the pharmacy would deliver services to meet the specific, local needs ofTairāwhiti.[87] In considering the RX8 application, Ms Roberts noted, first, that the pharmacywould be located in the supermarket. Her assessment was that would be useful forsome people who come into town once from rural areas to do their shopping and othererrands. It would mean one less stop which could encourage people to pick up theirscripts when they would not usually do so.[88] Ms Roberts also noted there was not another pharmacy in Tairāwhiti thatwaived the pharmaceutical co-payment. Ms Roberts observed that the non-picked upmedication bill each month was increasing and that any initiative that reduced cost towhānau was attractive.[89] RX8's proposal of longer hours was relevant. At that time, of all localpharmacies, only two had extended opening hours. Extended opening hours wouldallow some people, for example shift workers, to access pharmacy services outside ofnormal business hours.[90] Ms Roberts' evidence is that she did not carry out any specific research aboutthe effect of the co-payment waiver, or any other aspect of the application, at that time.She observed that detailed research into each application was not practical and herassessment was fundamentally pragmatic and practical (unless the Board or acommittee asked for research later in the process). She drew on her own knowledgeand experience, being from Tairāwhiti and having worked in the health area there formany years.[91] Ms Roberts observed that the objections raised by existing local pharmacistswho did not want a large competitor were not relevant to her assessment of theapplication under the Provider Policy, which focussed on the needs of the localpopulation and service provider, not the commercial interests of incumbent providers.[92] Ms Roberts also observed that while RX8 had provided robust informationabout its financial viability, she had some questions about its proposed service and theequity component to that, in particular the rural reach. She also noted missingimportant information in relation to how Countdown Pharmacy Gisborne woulddeliver services to meet the specific, local needs of Tairāwhiti.[93] Accordingly, on 27 November 2020 Ms Roberts emailed RX8 requestingfurther information on:(a) any policy RX8 had regarding the Vulnerable Children Act 2014;(b) recognising Countdown's national approach on waiving co-paymentfees, how RX8 would address the needs of the Tairāwhiti populationspecifically and potentially equitable approaches/initiatives RX8 hadconsidered for the rural population and the Māori population; and(c) whether RX8 had given any consideration to, or how it could workwith, other local health providers in the region.[94] After further correspondence, on 20 January 2021, RX8 provided an updatedICPSA application, together with a copy of the signed Countdown policy onvulnerable children. The updated application explained:(a) How Countdown Pharmacy Gisborne would engage with the mentalhealth and addiction services in Tairāwhiti.(b) That Countdown Pharmacy Gisborne endeavoured to remove thebarriers to delivery of high-quality healthcare for Māori and wasintending to implement a system to capture ethnicity, to be able to targetservices at Māori patients.(c) Examples of specific services that would be offered in CountdownPharmacy Gisborne.(d) A commitment by Countdown Pharmacy Gisborne to increase Māorirepresentation within its workforce.[95] On 10 February 2021 Ms Roberts presented a paper to Te Rōpū RauemiRautaki (Funding Management Group), an internal governance committee at HauoraTairāwhiti that reviewed funding applications. Ms Roberts' evidence is that Te RōpūRauemi Rautaki was aware of the nature of the application, the co-payment issue, theproposal to capture ethnicity data and the resistance to RX8's application from existinglocal pharmacists.[96] Te Rōpū Rauemi Rautaki supported the application going forward to therelevant advisory committees.[97] To prepare a paper for those committees and the Board, Ms Roberts assessedRX8's application using a "Health Equity Assessment Tool" (HEAT). That tool hadbeen introduced by the Māori Relationship Committee of Hauora Tairāwhiti,Te Waiora o Nukutaimemeha, to ensure that any new service being provided inTairāwhiti would not contribute to, and was intended to address, health inequity.[98] Ms Roberts also scored the application against weighted "benefits criteria"relating to population health (for example, elimination of health inequity), patientexperience, value for money (for example, return on investment in monetary terms)and enablers (for example, workplace development).[99] The application was then referred to Hiwa-i-te-Rangi, a statutory advisorycommittee established under s 36 of the NZPHDA. Its members comprised appointedcommunity members, members of Te Waiora o Nukutaimemeha and board members.The role of Hiwa-i-te-Rangi was to advise the Board on the needs of Tairāwhiti andhow to maximise the overall health gain for the Tairāwhiti community. Hiwa-i-te-Rangi was accountable to the Board and required to act consistently with The NewZealand Health Strategy.54[100] Hiwa-i-te-Rangi considered the RX8 application, together with an updatedpaper (including the HEAT and benefits criteria analysis) from Ms Roberts on16 February 2021. Hiwa-i-te-Rangi concluded that Countdown Pharmacy Gisbornewould benefit the community. The evidence from James Green who was theChief Executive of Hauora Tairāwhiti at the time, and present at the Hiwa-i-te-Rangidiscussion, was that RX8 was offering another option for the community to accesspharmaceutical services in a different way. That, together with longer hours, waiver54 Ministry of Health The New Zealand Health Strategy (December 2000).of the co-payment and delivery of specified services that the community needed, wereall proposals the Committee considered would benefit their community.[101] The Committee considered the impact of Countdown opening on othercommunity pharmacists, noting that there was no evidence to support their concernsand that Hauora Tairāwhiti was not responsible for protecting the economic interestsof incumbent providers in a competitive market. Mr Green's evidence is that Hiwa-i-te-Rangi was aware that RX8's waiver of the co-payment was a policy that could berevoked by RX8 at any time. The co-payment was one factor, but was notdeterminative, in the Committee's recommendation that the application proceed to theBoard for approval.[102] The application next proceeded to Te Waiora o Nukutaimemeha, a Māorirelationship committee of the Board. Te Waiora o Nukutaimemeha considered theapplication on 17 February 2021 noting, in particular, improved access as Māori whowent to the supermarket would be able to access the pharmacy as part of their normalroutine; RX8's commitment to improve equity within its organisation; and waiver ofthe co-payment. In that regard it noted that any initiative that reduced cost onindividual families in a deprived region was positive.[103] Te Waiora o Nukutaimemeha recommended that the application go to theBoard.[104] Members of the Board were elected or appointed by the Minister. The Boardgoverned Hauora Tairāwhiti and was responsible for major decisions, including entryinto service agreements.[105] The Board met on 23 February 2021 to consider RX8's application. Membersof the Board were familiar with the application, having attended the Hiwa-i-te-Rangimeeting, seen the recommendation from Te Waiora o Nukutaimemeha and read thepaper prepared for the Board.[106] The Board considered the recommendations of Hiwa-i-te-Rangi and Te Waiorao Nukutaimemeha. It discussed that Countdown would provide an added service inTairāwhiti, because prescriptions could be picked up while shopping and the co-payment waiver would reduce or remove the costs of some scripts. It also had regardto the opposition of local community pharmacists.[107] Having noted the concerns of incumbent pharmacists, the Board recommendedthat a meeting take place to discuss those concerns with Board representatives. Thatoccurred on 3 March 2021.[108] On 29 April 2021 Mr Green signed the ICPSA with RX8 on behalf of HauoraTairāwhiti. The ICPSA took effect on 3 June 2021.Evidence[109] The parties filed extensive affidavit evidence.[110] For the applicant, evidence was filed from a number of community pharmacistsand staff and clients of those community pharmacists.[111] The applicant also filed expert evidence from Dr Richard Meade,Professor Papaarangi Reid and Ms Shelley Cunningham. The first and secondrespondents sought an order excluding the expert affidavits on the basis that they areinadmissible. I discuss that application below.[112] For the first respondent, HVDHB, evidence was provided by Rachel Haggerty,who at relevant times was the Director, Strategy, Planning and Performance for Capitaland Coast District Health Board and HVDHB.[113] For the second respondent, Hauora Tairāwhiti, evidence was provided byJames Green, who at relevant times was the Chief Executive of Hauora Tairāwhiti;Ariana Roberts who at relevant times held the role of Portfolio Manager, PrimaryHealth and Community at Hauora Tairāwhiti; Nicola Ehau who at relevant times wasthe Group Manager – Planning and Funding, Hauora Tairāwhiti; Na Raihania who,prior to disestablishment of the DHBs, was the Chair of Te Wairoa o Nukutaimemehawhich was the Māori Relationship Board for Hauora Tairāwhiti.[114] Jeremy Armes, the Merchandise Manager – Pharmacy, Woolworths NewZealand Ltd, filed an affidavit on behalf of RX8.[115] Michael Haynes, the Manager of the Medicines Control branch withinMedsafe, filed an affidavit for the Ministry.Admissibility of expert evidence[116] The first and second respondents, supported by the third respondent, appliedto exclude the expert evidence filed for the ICPG, by Dr Meade, Ms Cunningham andProfessor Reid. The respondents say that evidence is inadmissible: it is irrelevant,addresses the substantive merits of the DHB decisions under review, although it wasnot before the decision-makers; in addition, the evidence is speculative.[117] Dr Meade is an economic consultant and researcher. He frames the purpose ofhis evidence as to give an expert opinion on whether a pharmacy offering to waive the$5 prescription co-payment for patients is likely to result — particularly for Māori —in more inequitable:(a) access to medicines, pharmacy services and/or facilities;(b) quality of pharmacy services; and/or(c) health and wellbeing outcomes.[118] The applicant says Dr Meade's evidence provides an economic perspective onthe relationship between waiver of the $5 co-payment and health equity, includingbarriers to accessing this type of health benefit, which (the applicant says) puts claimsof benefits to health equity (including Māori health equity) into context and willtherefore assist the Court.[119] The ICPG relies upon Dr Meade's evidence to support its submission that thewaiver of the co-payment fee could over time be accompanied by price discriminationand form part of a predatory pricing strategy. The applicant says the evidence isrelevant because it helps the Court understand the full commercial nature of RX8'sdiscounting strategy and that in turn is directly relevant to the applicant's argumentthat the DHBs fundamentally mischaracterised Countdown's proposal.[120] Ms Cunningham, the Deputy Chief Executive of Te Puna Ora o Mataatua(Te Puna Ora), a regional Māori health provider in the Eastern Bay of Plenty.Ms Cunningham's evidence identifies the process that Te Puna Ora adopts whenmaking decisions about Māori health (although Ms Cunningham does not discuss theprovision of pharmaceutical services).[121] Ms Cunningham's evidence is put forward to assist the Court to understandwhat "sufficient evidence" means in the context of measures intended to benefit Māorihealth equity and to demonstrate what te Tiriti principles require of DHBs.Ms Cunningham's evidence also addresses the need to correctly identify a commercialco-payment discounting strategy, relevant to the applicant's submission that the DHBsmischaracterised Countdown's application and asked themselves the wrong question.[122] Ms Cunningham's evidence provides examples of necessary considerations forthe development and successful implementation of health measures that benefit Māorihealth equity. The applicant submits that will also assist the Court by informing whatconstitutes sufficient evidence, the necessary information, and/or the correct questionsto ask, in the context of claims by decision-makers that certain pharmacy serviceswould be beneficial for Māori health equity.[123] Professor Reid is a Professor of Māori Health. Her affidavit provides expertopinion on what is needed to assess whether certain pharmacy services are beneficialfrom a Māori health equity perspective. The applicant says the evidence will assistthe Court by providing the Māori health-centred context needed to inform whatconstitutes sufficient evidence, the necessary information and the correct questions toask, in the context of claims by decision-makers that certain pharmacy services wouldbe beneficial for Māori health equity.[124] The first and second respondents do not challenge the independence orexpertise of the three deponents — they acknowledge that Ms Cunningham andProfessor Reid are well-known experts in Māori health — but seek to exclude it onthe basis that it is substantially irrelevant in the context of a judicial review of acontracting decision. The respondents note first that the evidence was brought intoexistence after the impugned decisions were made and is therefore not useful to assistthe Court in evaluating the legality of those decisions.[125] Further, the evidence seeks to establish that the decision-makers' decisionswere irrational, and is therefore irrelevant, because that is a question for the Court. Italso addresses the process the witnesses say the decision-makers should have followedand for that reason is irrelevant, because that too is a matter for the Court.[126] In addition, the respondents say, the evidence tends to focus on only one ofseveral factors taken into account by the DHBs in their decisions and it isfundamentally speculative.Discussion[127] Section 7 of the Evidence Act 2006 provides that evidence is admissible if it isrelevant. It is relevant "if it has a tendency to prove or disprove anything that is ofconsequence to the determination of the proceeding."[128] The admissibility of expert opinion evidence is governed by s 25 of theEvidence Act. Expert opinion is admissible only "if the fact-finder is likely to obtainsubstantial help from the opinion in understanding other evidence in the proceedingor in ascertaining any fact that is of consequence to the determination of theproceeding."[129] The utility of expert evidence is diminished in the context of a judicial reviewapplication, where the Court is considering the decision-making process, not thecorrectness of the decision taken. For that reason, expert evidence going to the meritsof the decision, which was not before the decision-maker, is not relevant orsubstantially helpful and therefore is not admissible.[130] Similarly, expert evidence that goes to questions of law such as an allegedfailure by the decision-maker to take relevant matters into account or to apply thecorrect legal test will generally not be substantially helpful because the decision-maker's legal obligations are a matter for the Court.[131] I acknowledge the experts' expertise and independence. In particular, Iacknowledge that Professor Reid and Ms Cunningham have significant expertise inissues regarding Māori health. The question for the Court however is whether theirevidence, in the form in which it is presented, is substantially helpful in relation to thisapplication for judicial review.[132] Dr Meade's evidence does not take account of the full context or the full rangeof issues considered by the DHBs in their decision-making processes. The evidencedoes not analyse any data relevant to the pharmacy market in Gisborne or the HuttValley. Dr Meade's evidence focuses almost entirely on the effect of the co-paymentwaiver, although he acknowledges there are other factors relevant to access. Dr Meadeonly briefly addresses the proposal to increase operating hours, by reference to studiesin Europe. He does not give a view on the other factors taken into account by theDHBs. As the first and second respondents submit, it is not credible to advance theargument that another conclusion could have been reached by the DHBs on the basisof Dr Meade's evidence around co-payments, where there is no accompanyingevidence on the relative significance of increased opening hours, location andconvenience and the impact of those factors on greater access, in New Zealand.[133] Many of Dr Meade's conclusions are speculative: for example, co-paymentwaivers "tend to benefit patients for whom access is already possible"; discounters"might" withdraw the co-payment waiver once "rival" pharmacies have left the sector.[134] I also accept that Dr Meade's evidence is in effect evidence on what he, as anexpert, would have considered had he been in the decision-maker's position. It is anattempt to challenge the reasonableness of the substance of the decisions.55 I concludethat the evidence is inadmissible in this judicial review proceeding.55 See for example Diagnostic Medlab Ltd v Auckland District Health Board HC Auckland CIV-2006-404-4724, 27 November 2006 at [30]–[31] and [34].[135] As with Dr Meade, Ms Cunningham's commentary on the DHBs' decisions islimited to the co-payment discount. Her evidence too goes to the applicant'ssubmission of a "basic error" made or "wrong question" asked by the DHBs. Forexample, Ms Cunningham notes that "[c]orporate-backed pharmacies do not haveMāori health equity as their objective." As the respondents note, the issue in this caseis not RX8's decision to waive the co-payment, but the DHBs' decision to enter intoICPSAs with RX8. Ms Cunningham's evidence is about one process for makingdecisions about Māori health. Her experience is clear, but it relates to a differentcommunity.[136] It appears that Ms Cunningham's evidence proceeds on the basis that the DHBsdid ask themselves the "wrong question" in relation to RX8's possible motivation towaive the co-payment and the impact of that on health equity for Māori. Thatassumption is not useful, as I discuss below in relation to the applicant's first threegrounds of review. I conclude that Ms Cunningham's evidence, like Dr Meade's, isinsufficiently specific to the context and factors relevant to the DHBs to besubstantially helpful and is excluded for that reason.[137] To a large extent, Professor Reid's evidence is undisputed: Māori experiencesignificant health inequities, that raises complex issues and requires a systemic and in-depth analysis. However, Professor Reid's evidence goes further to discuss thesubstantive issue before the DHBs. Again, I conclude that the evidence is notsubstantially helpful to the Court and should not be admitted.Grounds of review[138] The applicant pleaded six grounds of review. The first to fourth grounds seekjudicial review of the decisions of HVDHB and Hauora Tairāwhiti to enter intoICPSAs with RX8:(a) First ground of review – the decisions were invalid and unlawfulbecause HVDHB and Hauora Tairāwhiti decided to enter into theICPSAs without sufficient and suitable evidence.(b) Second ground of review – the decisions were invalid and unlawfulbecause HVDHB and Hauora Tairāwhiti asked themselves the wrongquestion and failed to take reasonable steps to acquaint themselves withthe information necessary to enable the correct question to be answered.(c) Third ground of review – there was no rational connection between theevidence and the decisions.(d) Fourth ground of review – the decisions were not taken in accordancewith te Tiriti o Waitangi.[139] The ICPG seeks:(a) declarations that the decisions were unlawful and invalid; and(b) orders that HVDHB and Hauora Tairāwhiti reconsider their decisions.[140] The fifth ground of review is that Hauora Tairāwhiti failed to monitor thedelivery and performance of services by RX8. In relation to that ground, the applicantseeks orders requiring the DHB to withdraw from the ICPSA.[141] The sixth ground of review is brought against the Ministry. It challenges theMinistry's decisions under the Medicines Act to grant licences to RX8 to operateCountdown Pharmacies and seeks a declaration that the decisions were unlawful andinvalid and revocation of all pharmacy licences held by RX8.[142] In addition to the relief sought on the judicial review application, the ICPGalso seeks declarations under the Declaratory Judgments Act in respect of theconstruction of the NZPHDA and the Pae Ora Act.Are the decisions by HVDHB and Hauora Tairāwhiti reviewable?[143] The first, second and fourth respondents raise a threshold question about thescope of review. They say the decisions in this case do not engage the Court's fullsupervisory jurisdiction: the decisions were commercial, contracting decisions, madein the course of a procurement process, and therefore the scope of review is primafacie narrow, unless the context (nature of the decision, nature of the body, statutorysetting, nature of the interests sought to be protected by the applicant) indicates a needfor broader review. They rely on Mercury Energy Ltd v Electricity Corporation ofNew Zealand Ltd,56 Lab Tests Auckland Ltd v Auckland District Health Board,57Healthcare of New Zealand Ltd v Capital and Coast District Health Board,58 Ririnuiv Landcorp Farming Ltd,59 and Attorney-General v Problem Gambling Foundation ofNew Zealand.60[144] The DHBs were not making strategic or policy decisions. Those decisions hadalready been made through annual plans, government strategy and strategic or policydevelopment implemented through the NZPHDA. The DHBs were acting pursuantto, and in fulfilment of, those plans and policies. That was akin to the Ministry seekingto implement strategy through contracts with private providers in Problem Gambling.[145] In deciding whether to enter into an ICPSA with RX8, HVDHB and HauoraTairāwhiti were choosing whether to fund the provision of health services through aparticular provider, by entering into a contract that would set out each party's rightsand obligations. That was the case with any service agreement entered into by theDHBs. It does not mean that each individual contracting decision imports the fullrange of judicial review.[146] The essentially commercial nature of the decisions was reflected in the factthat the DHBs had procedures for deciding whether to enter into any serviceagreement. Both HVDHB and Hauora Tairāwhiti followed their usual processes indeciding to enter into ICPSAs with RX8.[147] Hauora Tairāwhiti had a single policy for all service agreements. It carried outdue diligence on the commercial viability of the proposed provider and consideredwhether there was any need for the service. Its assessment was pragmatic and56 Mercury Energy Ltd v Electricity Corporation of New Zealand Ltd [1994] 2 NZLR 385 (PC).57 Lab Tests Auckland Ltd v Auckland District Health Board [2008] NZCA 385.58 Healthcare of New Zealand Ltd v Capital and Coast District Health Board [2012] NZHC 3417.59 Ririnui v Landcorp Farming Ltd [2016] NZSC 62.60 Attorney-General v Problem Gambling Foundation of New Zealand [2016] NZCA 609.practical, using checklists, the HEAT and benefits criteria. It did not consult publiclyon any decision to enter into a service agreement.[148] HVDHB had its own contracting policy for ICPSAs. In accordance with itspharmacy contracting policy, the RX8 application was submitted for consideration bythe evaluation panel, comprising a cross-section of senior health leaders within theorganisation. The panel made a recommendation to the decision-maker whoconsidered the recommendations of the panel and formed her own view on the meritsof the application.[149] The first and second respondents acknowledge that the contracts involved theuse of public funding and there was therefore a public interest component to the DHBs'decisions. But, as in Lab Tests, Healthcare and Problem Gambling, the fact thatcontracts relate to the provision of health services does not necessarily call for the fullpanoply of review. The applicant's argument would make any act of a public entity,including Crown entities, broadly reviewable.[150] Plainly DHBs were public bodies but, as statutory entities,61 they were a stepremoved from the core machinery of government and legally distinct from the Crown.They were required to act commercially in some circumstances, for example in respectof the efficient and effective provision of public health services and use of publicfunds. DHBs were primarily accountable to the Minister of Health, who had broadpowers of supervision in the conduct of their functions.[151] DHBs were responsible for making day-to-day decisions about funding andhealth services and better equipped to do so than the Court.[152] DHBs were empowered to negotiate and enter into service agreements on anyterms and conditions, without following a specific process. Any failure by a DHB tocomply with its statutory duties would not affect the validity or enforceability of thoseagreements.62 Entering into a contract for the provision of health services isfundamentally about whether there is a need for provision of that service and whether61 CEA, s 15.62 NZPHDA, s 87.the provider is qualified and able to provide the service. These were essentiallycommercial considerations.[153] The first and second respondents say that the nature of the ICPG, as a specialinterest business group, seeking to advance its own commercial interest, supports anarrow standard of review. The respondents submit that, in the past, individualmembers of the ICPG have objected to DHBs approving ICPSAs for new providers,including (but not limited to) discount pharmacies, on anti-competitive grounds. Allof the pharmacists who have provided evidence for the ICPG are direct competitors ofthe two pharmacies in issue, with a direct commercial interest in those ICPSAs beinginvalidated and in this proceeding in effect the ICPG wants the contracts between theDHBs and RX8 to be set aside.Applicant's submissions[154] The applicant says that the courts should have a robust role in exercising thesupervisory jurisdiction of judicial review and the starting point is expansive: "allexercises of public power are reviewable".63 It argues against a categorical approach.[155] The Court of Appeal in Attorney-General v Problem Gambling did not go sofar as to say procurement decision will always give rise to a commercial context thatrenders a public body's decision non-reviewable: the procurement process is, rather,"a powerful indicator that the context was commercial."64 It is simply an indicator.[156] Drawing on Ririnui, Problem Gambling and Lab Tests, the applicantapproaches the contextual factors in the following way.Statutory and policy setting[157] The applicant says the public service obligations set out in the NZPHDAunderscore that DHBs are not simply commercial commissioning agents. One of theobjectives in s 3(1)(b) is "to reduce health disparities by improving the healthoutcomes of Māori and other population groups". That explicit focus on addressing63 Ririnui v Landcorp Farming Ltd, above n 59, at [1].64 Attorney-General v Problem Gambling Foundation of New Zealand, above n 60, at [47].inequality suggests DHBs are not operating as commercial providers with priorities toreduce costs or to act as a business.[158] The NZPHDA's key themes of community-centred care, improving healthoutcomes, meeting the needs of Māori and the public safety dimension to operation ofa pharmacy are important.[159] Section 4 of the NZPHDA refers to the need "to recognise and respect theprinciples of the Treaty of Waitangi"; that reinforces the centrality of the statutoryobjective of improving health outcomes for Māori.[160] There is a focus on "outcomes" and that is relevant to how DHBs shouldconceive of their priorities.[161] The scheme of the Medicines Act reinforces the public safety dimensioninvolved in the provision by DHBs of community pharmacy services.Nature of the body[162] While DHBs are not core government departments, like the Ministry of Healthin Problem Gambling, they are public bodies; they were Crown agents under the CEA.They are more proximate to government departments and Ministers than State-ownedenterprises. That points more strongly for, rather than against, reviewability.Nature of the decision[163] The applicant and the Pharmacy Guild say the decisions challenged have aregulatory character: they involve enabling new bodies to operate as a pharmacistwithin the public health system.[164] The position of the DHBs and the community pharmacy sector is not genuinely"commercial". The DHBs held a monopoly over the ability to award this contract —without an ICPSA, a community pharmacy cannot distribute subsidised pharmacymedicines. To that extent, the contracts have an authorising or regulatory element.They are not a merely operational or administrative decisions. They can be contrastedwith a decision to award a tender or contract to one provider or another, which may becharacterised as more operational. The grant of an ICPSA does not involve selectingone applicant over another; it is a decision that requires the applicant to meetindependent standards for the provision of healthcare services to a particularpopulation.[165] The DHBs were not in competition with each other (as they were in other,genuinely commercial procurement processes) as a community pharmacy could onlycontract with the DHB where it was physically located.[166] Nor is the ICPSA negotiated between the parties. All 20 DHBs used a singlecentral "evergreen" contract. That ICPSA is then promulgated to all communitypharmacy contract holders in New Zealand. Each of the more than 1,000 communitypharmacies must sign an ICPSA; there is no ability for an individual communitypharmacy to negotiate on the terms of the core ICPSA.The nature of the interest(s) affected[167] The applicant acknowledges that some members of the ICPG have acommercial interest in the outcome of the decision in this case. It says though that thiswill often be the case where a commercial operator challenges a regulatory decision,including on public law grounds. The key question should be whether a question oflaw arises, and whether legal obligations have been breached.[168] In any event, the interests involved do not simply relate to a pharmacy and theDHB. The issuing of a licence and the grant of an ICPSA have downstreamconsequences for patients, other pharmacies, and community well-being. The natureof the interest points to decision-making being reviewable on standard public lawgrounds.[169] The Pharmacy Guild supports the position taken by the applicant. It says theprovision of community pharmacy services is a fundamental element of primary andcommunity healthcare that DHBs are required to provide to the public — more so thaneither laboratory tests services or gambling support programmes. As demonstrated bythe role of the pharmacy sector during the COVID-19 pandemic, communitypharmacy is an essential service. The decisions to award ICPSAs are not "ordinarycommercial transactions" and have a sufficient public content and context that theCourt should exercise its supervisory jurisdiction.Discussion[170] The starting point is Mercury Energy,65 where the Privy Council concluded (inthe context of the State-Owned Enterprises Act 1986 (SOE Act)), that bare contractualrelations are not subject to judicial review, but if there is an element of acting in thepublic interest in those contractual relations, that may not be the case.[171] Lord Templeman's dictum is often relied on:66It does not seem likely that a decision by a state-owned enterprise to enter intoor determine a commercial contract to supply goods or services will ever bethe subject of judicial review in the absence of fraud, corruption or bad faith.[172] However, the SOE Act is a very different piece of legislation from theNZPHDA. The distinction between the respective subject matters is obvious. AsEichelbaum CJ observed in Southern Community Laboratories Limited v HealthcareOtago Limited:67In New Zealand, historically the provision of health services was regarded asone of the core functions of the State. While that concept has undergonemodification, the provision of such services is not regarded as a tradingactivity in the same sense, or to the same extent, as other services onceprovided directly by Government agencies.[173] On the other hand, broader considerations such as social responsibility and theinterests of the community are relative rather than absolute. Ultimately it is a questionof degree. There is no doubt that the provision of community pharmacy services hasa public interest component. By the same token, again, quoting fromEichelbaum CJ,68 virtually every administrative decision made by or on behalf of aDHB must have at least the potential to impact directly or indirectly on the quality of65 Mercury Energy Ltd v Electricity Corporation of New Zealand Ltd, above n 56.66 At 391.67 Southern Community Laboratories Ltd v Healthcare Otago Ltd Dunedin, CP 30/96, 19 December1996 at 13, in relation to a Crown Health Enterprise.68 At 16.healthcare services. "That alone cannot be sufficient to attract the availability ofpublic law remedies."69[174] As Cooke J said in New Zealand Institute of Independent Radiologists vAccident Compensation Corp,70 one way of addressing the question whether acommercial contract should be subject to judicial review (absent fraud, corruption orbad faith) is to focus on the legal limits or controls that exist with respect to contractualpowers:71The most straightforward question is to ask what the legal limits on theexercise of discretionary powers are in a particular case, and then assesswhether the public body has complied with them.[175] The DHBs were required to exercise their contractual powers in a manner thatwas consistent with their statutory duties as set out in ss 22 (objectives) and 23(functions) of the NZPHDA:22 Objectives of DHBs(1) Every DHB has the following objectives:(a) to improve, promote, and protect the health of people andcommunities:23 Functions of DHBs(1) For the purpose of pursuing its objectives, each DHB has thefollowing functions:(b) to actively investigate, facilitate, sponsor, and develop co-operative and collaborative arrangements with persons in thehealth and disability sector or in any other sector to improve,promote, and protect the health of people, and to promote theinclusion and participation in society and independence ofpeople with disabilities:[176] However, as might be expected, these provisions are framed at a level ofgenerality. While s 23 describes the DHBs' functions, it does not purport to createparticular legal requirements in relation to any individual decisions.69 At 16.70 New Zealand Institute of Independent Radiologists v Accident Compensation Corp [2022] NZHC3547 at [33].71 At [36].[177] Section 25 is a generic power to enter into service agreements. It does not referto particular kinds of agreement or set out criteria and procedures for doing so, butrather refers to "any terms and conditions that may be agreed".72 Section 25 did notimpose procedural requirements on DHBs.[178] A consideration of the number of service agreements entered into by the DHBsprovides useful context. As Blanchard J observed in New Zealand Private HospitalsAssociation – Auckland Branch (Inc) v Northern Regional Health Authority, in thecontext of a tender process by the Northern Regional Health Authority for hospitalcontinuing care services, a regional health authority will be required to enter into manysuch contracts:73It would be quite intolerable if, in addition to rules of contract law and otherprinciples of the general law (including equity), a statutory body of this type,which is after all exercising a trading function, should also be subject tojudicial review[179] In the 2020/21 financial year, HVDHB entered into eight new serviceagreements, including one ICPSA (the Countdown Wainuiomata ICPSA); entered into218 contract variations for existing service agreements; and maintained andmonitoring a total of 246 service agreements.[180] In the 2020/21 financial year Hauora Tairāwhiti entered into or varied 73service agreements.[181] Both HVDHB and Hauora Tairāwhiti followed their usual processes andcriteria — the Pharmacy Contracting Policy in the case of HVDHB and its ProviderPolicy in the case of Hauora Tairāwhiti — when deciding to enter into ICPSAs withRX8. That reflected the essentially commercial nature of the decisions.[182] Legislative accountability mechanisms are relevant.74 DHBs were governedby a largely elected board and accountable to the Minister. The accountability72 Section 25(2)(a).73 New Zealand Private Hospitals Association – Auckland Branch (Inc) v Northern Regional HealthAuthority HC Auckland CP 440/94, 7 December 1994 at 42–43.74 Lab Tests, above n 57, at [89].mechanisms in the NZPHDA, including direct elections of boards and intervention bythe Minister, reduced the need for broad supervision by the Court.[183] The applicant and the Pharmacy Guild submit that the extensive regulatory andethical obligations and standards to which pharmacists are subject highlight thesignificant public interest factors and public safety implications attached to the role ofcommunity pharmacy.[184] However, in my view, the public safety regulatory context points against abroad scope of review. A pharmacy must have a licence before it can provide servicesto the public. The Ministry of Health is the licensing authority and regulates theconduct of pharmacies under the licensing regime. It is that regime that is primarilyconcerned with public safety. It was only once a DHB entered into an ICPSA with apharmacy that the pharmacy owed contractual obligations to the DHB and could beheld to account under the contract. Given that, a DHB's decision to enter into anICPSA did not require close supervision by the Court to ensure public safety.[185] The two factors that weigh strongest in my assessment are, on the one hand,the quasi-regulatory nature of the granting of an IPCSA and, on the other, thecommercial interests of the applicant group.[186] As to the first, this case involves a contracting environment different from, forexample, Lab Tests and Problem Gambling. In the former a tender process was used,with the three DHBs issuing a request for proposals and two tenderers, directlycompeting with each other. In Problem Gambling, a request for proposals was issuedas part of a nationwide contestable procurement exercise. Nor is this a commercialdecision in the same way as in Healthcare of New Zealand v Capital and Coast DistrictHealth Board,75 which involved decisions about whether and how savings could bemade in the delivery of relevant services. Here, the DHBs were not making choicesin that sense.[187] As the Pharmacy Guild notes, the DHBs held a monopoly over the ability toaward the ICPSA. DHBs were not in competition with each other. Nor is the ICPSA75 Healthcare of New Zealand Ltd v Capital and Coast District Health Board, above n 58.negotiated between the parties — all DHBs used a single, central "evergreen" contract.That ICPSA is then promulgated to all community pharmacy contract holders in thecountry. This is not therefore a case where more onerous procedural obligations mayunduly fetter a public body's ability to negotiate effectively in the context ofcommercial negotiations with private sector service providers.[188] But I cannot ignore the clear commercial nature of the applicant's interest. TheICPG is a special interest business group. It was incorporated shortly before thisproceeding was filed to "represent and promote the interests of independentcommunity pharmacies and pharmacists". The ICPG members are independentcommunity pharmacists who are commercial competitors of the two Countdownpharmacies. As in Problem Gambling,76 that commercial interest is a criticalcontextual factor. While having a level of commercial interest in the outcome of ajudicial review is not a disqualifying factor,77 as noted in Problem Gambling,78 it isnot the function of judicial review to advance private interests in a competitivebusiness market.Conclusion on scope of review[189] Taking all of the contextual factors into account, I conclude that a narrow scopeof review is appropriate.[190] In addition to the applicant's commercial interest, I particularly note theNZPHDA did not impose procedural requirements on DHBs for granting serviceagreements. They were empowered to negotiate and enter into service agreements onany terms and conditions, without following a specific statutory process. While theICPSA was not a "standard" service agreement, nevertheless it was governed by eachDHB's policy and procedures, which in each case were adhered to. The Court shouldbe reluctant to impose its own procedural requirements.76 Attorney-General v Problem Gambling Foundation of New Zealand, above n 60, at [43].77 See for example Laker Airways Ltd v Department of Trade [1977] QB 643.78 Attorney-General v Problem Gambling Foundation of New Zealand, above n 60, at [42].[191] The accountability mechanisms on the entities, through the direct elections ofboards and intervention by the Minister, reduce the need for broad supervision by theCourt.[192] While the grant of an ICPSA has a regulatory flavour, and there is a publicsafety factor to the provision of community pharmacy services, that was not directlyengaged in the DHB decisions on the ICPSAs. Public safety concerns are moredirectly addressed by the Medicines Act, including the power of the Ministry of Healthto grant a licence to operate a pharmacy.[193] The applicant does not allege fraud, corruption, bad faith or analogouscircumstances which would render the decisions reviewable on narrower grounds andthe judicial review causes of action against the first and second respondents musttherefore fail.Specific grounds of review[194] In the event I am wrong in my conclusion that the decisions are reviewableonly on the narrow Mercury Energy grounds, I have also considered the specificgrounds of review.Rationality — first, second and third grounds of review"Correct question"[195] The first three grounds of review all centre around the zero co-payment — howthe DHBs perceived it and how they assessed it. Essentially the same evidence isrelevant to each of the three grounds of review.[196] At the hearing, the applicant advanced the second ground of judicial review ina somewhat different way than pleaded. The pleading is that each of HVDHB andHauora Tairāwhiti asked themselves the wrong question. In its amended statement ofclaim the applicant says the question the DHBs asked was whether disparities existbetween Māori and non-Māori in access to medicines. The "correct question" aspleaded was "whether there was sufficient evidence that zero co-payments and longerhours would have a material effect in reducing health disparities by improvinghealth outcomes for the [DHB's] resident population ".79[197] At the hearing the correct question was submitted to be "whether Countdown'szero co-payment approach as a commercial marketing strategy would improve accessto medicines and health outcomes for disadvantaged population groups, includingMāori." That question points to an allegedly mistaken understanding of RX8'scommercial motivations and future actions.[198] That "basic error" of both DHBs, being their failure to identify the co-paymentdiscount offered by RX8 as a commercial loss-leading strategy, and instead proceedingas if Countdown was benevolently removing fees in the public interest, is essential tothe applicant's case. It says that error led the DHBs to conclude that the Countdownproposals were "pro-equity" and therefore justified approving the ICPSAs in eachcase. The ICPG says it was akin to "confusing a bribe for a charitable donation" or"assuming that a payday lender offering high interest rates is making money availableto allow families to meet their basic financial needs".[199] That formulation of the case colours all of the first to third causes of action andalso, to some extent, the fourth (in relation to te Tiriti).[200] The first and second respondents say that because the alleged error was notraised in the pleadings, it was not addressed in their evidence and the Court ought notto consider that aspect of the claim as framed at the hearing. RX8 too notes that "lossleading"/"commercial marketing strategy" was not pleaded and there is no probativeevidence of "loss leading".[201] I agree with the respondents that the failure by the applicant to plead what itnow says is the "correct question" is significant. The question as framed in theamended statement of claim and as framed in the ICPG's submissions arefundamentally different questions. The question posed in the submissions does, as thefirst and second respondents submit, call into question the credulity of DHB decision-makers and RX8's commercial ethics, without a proper basis.79 Amended Statement of Claim (11 July 2022) at [133(b)].[202] It also invites a judicial inquiry into an alleged "commercial marketingstrategy" by Countdown and the allegations/inferences that the decision-makers inHVDHB and Hauora Tairāwhiti were "removing fees benevolently in the publicinterest". I accept that, if this had been pleaded, the respondents would have filedevidence in response.[203] The high point of the applicant's evidence appears to be a 28 June 2019 articlein Pharmacy Today. That article quotes Countdown Pharmacy's business managerJeremy Armes, where he says that the experience of the Auckland Countdownpharmacies' discounting of the co-payment has been that "prescription volumes grewand that customers were more likely to buy OTC [over the counter] products." Hewas directly quoted as saying "[i]t is economically viable, or we wouldn't be doingit."[204] The submission for the applicant is that Ms Haggerty (the decision-maker atHVDHB) does not refer to how Countdown Pharmacy might be sustaining thediscount or whether there might be trade-offs elsewhere as a result, notwithstandingCountdown's publicly stated position in Pharmacy Today. As the first and secondrespondents submit, if the "correct question" is to be reframed, they ought to have hadthe opportunity for Ms Haggerty to respond on that issue.[205] I conclude that on this issue the ICPG is bound by its pleadings.[206] In any event, I do not accept that the DHBs asked the wrong question. I acceptthat even if removal of the co-payments might be characterised as a commercialmarketing strategy, that would not invalidate the HVDHB and Hauora Tairāwhitidecisions to grant the ICPSAs.[207] First, and self-evidently, pharmacies operate as businesses. One might expectthat all pharmacies would have a strategy to ensure they remain profitable.[208] The criteria applied by the DHBs, including effects on equity and ongoingfinancial viability, are effects or outcomes focussed. These are assessed objectivelyand qualitatively (to the extent reasonably practicable), rendering RX8's subjectiveintention irrelevant.[209] In any event, it is common sense — and I am prepared to take judicial noticeof the fact — that reducing or removing the co-payment would reduce the cost barrierto access and increase access to everyone, but most particularly to those for whom thecost barrier was significant. That appears to have been borne out in practice.Ms Haggerty's evidence is that following the introduction of zero co-payments at theCountdown Pharmacy in Wainuiomata, there has been an increase in dispensing ratesin the Hutt Valley District and that increase is the same for all demographic groups.[210] The "correct question" posed by the ICPG in its submissions presumes that thedecisions by both DHBs to enter into an ICPSA with RX8 were predicated solely onCountdown's zero co-payment approach. But it is clear from the evidence that bothdecisions were based on a number of factors.[211] The HVDHB decision was made in the context of its Pharmacy ContractingPolicy, which required the Panel and Ms Haggerty, as the decision-maker, to considerthe application in accordance with the decision-making criteria set out in the Policy.[212] In addition to the co-payment discount, the decision by HVDHB was alsobased on Countdown's proposal to have longer opening hours than the other twopharmacies in Wainuiomata. Ms Haggerty's evidence, and her correspondence withRX8 at the time, make it clear that increased hours was a key factor in her decision.[213] The Hauora Tairāwhiti decision was made in the context of the Provider Policy,consideration by three committees, and assessment by the Board. Hauora Tairāwhiticonsidered the commercial elements of the application, how the services would meetthe needs of the local population, and the effect on reducing inequities.[214] As Ms Roberts' evidence notes, the Hauora Tairāwhiti Provider Policy wasdesigned to assess financial considerations (for example, the financial viability andsustainability of the applicant) and the applicant's business plan (for example, how itwould serve the local population specifically).[215] Hauora Tairāwhiti's decision was based on a number of factors, including thebenefits of having another pharmacy option in Tairāwhiti, the proposal fromCountdown to have extended opening hours on weekdays and weekends, shopperconvenience through customers being able to collect their groceries and medicines atthe same place, Countdown's proposal to address Hauora Tairāwhiti's strategicpriorities in relation to mental health and addiction, and the prospect of increasing thelocal and Māori workforce.[216] It is also apparent that Hauora Tairāwhiti was aware of concerns from localpharmacists about RX8's commercial model. Its Board referred to thecommunications from those pharmacists when making its decision and HauoraTairāwhiti sought more information about national pharmacy sector views ondiscounting the co-payment.[217] I accept that RX8's proposal to discount co-payments was not determinative ofeither of the HVDHB or Hauora Tairāwhiti decisions.[218] The multifactorial nature of the DHBs' decisions is relevant to the level ofinquiry they ought to have undertaken. See for example R (on the application ofFriends of the Earth Limited) v the Secretary of State for International Trade/ExportCredits Guarantee Department:80 where a decision involves a high degree of policy judgment, it may bepermissible for the decision maker to adopt a less rigorously technicalapproach to an individual feature that bears consideration as one featureamongst many than would be the case if that feature were to be the onlymaterial feature or the sole determinant for the decision. In the same way,where a decision maker decides that a particular feature or consideration is notto be determinative (which decision may only be vitiated on irrationalitygrounds), it may be permissible to adopt a less technically rigorous approachto that feature than would be the case if it were necessarily or potentiallydeterminative of the outcome of the decision.[219] It follows that I am not persuaded that either of HVDHB or Hauora Tairāwhitifailed to ask the right question or to obtain the relevant information to answer the rightquestion. Each of them had sufficient and suitable evidence to make their respective80 R (on the application of Friends of the Earth Limited) v the Secretary of State for InternationalTrade/Export Credits Guarantee Department [2022] EWHC 568 at [101].decisions to grant the ICPSAs. For the same reasons, I cannot conclude that there wasnot a rational connection between the evidence and the DHB decisions.[220] The first to third grounds of review fail.Te Tiriti[221] The ICPG says that HVDHB and Hauora Tairāwhiti each acted unlawfully byfailing to enable Māori to contribute to decision-making in the appropriate way andthereby acting inconsistently with te Tiriti.[222] In particular, it says that HVDHB:(a) had no separate committee or grouping to provide Māori-specificadvice or allow for differences of view among Māori partners;(b) did not solicit any Māori input when considering the CountdownICPSA; and(c) did not follow the requirements of its own Te Pae Amorangi policy.[223] The applicant also says that HVBHB created a legitimate expectation (throughTe Pae Amorangi) that te Tiriti would be honoured in the DHB's approach to pharmacyservices, that expectation was relied on, but HVDHB did not follow through on theexpectation.[224] In relation to Hauora Tairāwhiti, the ICPG says it:(a) did not have an appropriate Māori policy guiding pharmacy decisions;(b) failed to consult externally with Māori communities on its CountdownICPSA decision; and(c) failed to be adequately informed of the impact of the CountdownICPSA on equitable Māori health outcomes.[225] For those reasons the decisions by both DHBs to grant the application byCountdown for an ICPSA was unlawful and invalid.[226] In response, the first and second respondents note that DHBs are Crownentities, legally separate to the Crown. They are not a Treaty partner.[227] The NZPHDA recognises Treaty principles, through the mechanisms in pt 3,81which included requirements for mechanisms to enable Māori to contribute todecision-making on, and participation in the delivery of, health and disability services.Section 25 did not impose additional Treaty requirements when a DHB entered into aservice agreement. DHBs discharged their Treaty obligations if they acted inaccordance with the NZPHDA.[228] In any event, each DHB had policies and structures which provided for Māorito be part of the decision-making process; each considered the RX8 application froman equity perspective.[229] In its 2020/21 annual plan, Hauora Tairāwhiti recognised the principles of theTreaty, as stated by the Waitangi Tribunal in the Hauora Report, and explained how itwould apply those principles in its decision-making, including the use of Te Waiora oNukutaimemeha, the iwi relationship committee of Hauora Tairāwhiti. Te Waiora oNukutaimemeha consisted of a variety of iwi representatives, community-electedmembers and a Māori health provider, to ensure Māori had a central decision-makingrole in Hauora Tairāwhiti. External consultation was not necessary for the communitybecause Māori in the community had selected their experts, Te Waiora oNukutaimemeha members, to speak on their behalf.[230] Te Waiora o Nukutaimemeha considered RX8's application from an equityperspective. This ensured that the Māori voice informed Hauora Tairāwhiti's decision-making process.[231] Te Waiora o Nukutaimemeha developed the HEAT tool and 'benefits criteria'analysis to inform every application for a service contract made in Hauora Tairāwhiti,81 NZPHDA, s 4.to ensure Hauora Tairāwhiti could accurately assess the impacts of the applicationfrom an equity perspective. Te Waiora o Nukutaimemeha did not consider a Māori-specific policy was required for Hauora Tairāwhiti's decision-making.[232] Hauora Tairāwhiti refutes the allegation that Hauora Tairāwhiti was notinformed of the impacts of its decision on equitable Māori health outcomes.51 per cent of the population in Tairāwhiti identify as Māori and Tairāwhiti districtalso has the highest level of deprivation in the country. Hauora Tairāwhiti was part ofTe Manawa Taki Leadership Group. That group partnered with Te Manawa Taki IwiRelationship Board to develop its Regional Equity Plan 2020–2023 and establishTe Manawa Taki Governance Group, a "Te Tiriti inspired governance group" whichdemonstrated shared leadership and decision-making. Inevitably, Hauora Tairāwhitiwas well aware of the impact of these factors on access to health services. Te Waiorao Nukutaimemeha specifically considered that the impact of the Countdown ICPSAon equitable Māori health outcomes would be positive, in that it could improve accessfor Māori as they could access that service in their normal routine, and RX8 hadcommitted to improving equity in their organisation, including by growing the Māoriworkforce.[233] In relation to HVDHB, its Pharmacy Contracting Policy required a Māorirepresentative on its evaluation panel. For the Countdown Wainuiomata application,this was Ms Waldegrave in her capacity as the Acting Director of HVDHB's MāoriHealth Unit. Ms Waldegrave was an experienced researcher and had insight into localcommunities, including Wainuiomata. The Māori Health Unit was a team establishedto "support whānau, the community, and the health workforce to improve healthoutcomes for Māori." The Unit played an important role and voice in relaying Māoriperspectives to the evaluation panel.[234] Ms Haggerty gave the views of Ms Waldegrave (who supported theapplication) greater weighting than the rest of the panel (who advised against theapplication), on the basis of her agreement with Ms Waldegrave that Countdown'sproposal to discount co-payments and increased operating hours had the potential toincrease access to pharmacy services.[235] As to the ICPG's breach of legitimate expectation submission, HVDHB notesfirst the general nature of the alleged commitment. Second, it says the representativefunction of the Māori Health Unit on the evaluation panel is entirely consistent withHVDHB's commitment to involve Māori in decision-making and ensure "appropriateengagement and partnership" with Māori communities. There is no expresscommitment to "internal or external structures for Māori decision-making," assubmitted by the ICPG, and the document expressly cautions that there cannot be a"one-size-fits-all approach" to partnership. To the extent Te Pae Amorangi may havecreated a legitimate expectation, HVDHB submits it is one that has been met.Discussion[236] The DHBs were Crown entities owned by, and legally separate from, theCrown.82 They were not the Crown83 and therefore not a Treaty partner.[237] DHBs did not have a general statutory objective or function to act consistentlywith the principles of the Treaty. They were required to comply with their empoweringstatute, the NZPHDA.[238] Section 4 of the NZPHDA provided that:4 Treaty of WaitangiIn order to recognise and respect the principles of the Treaty ofWaitangi, and with a view to improving health outcomes for Maori,Part 3 provides for mechanisms to enable Maori to contribute todecision-making on, and to participate in the delivery of, health anddisability services.[239] Part 3 of the NZPHDA established DHBs. Part 3 included requirements formechanisms to enable Māori to contribute to decision-making on, and participation inthe delivery of, health and disability services:(a) Māori membership on DHB boards.8482 CEA, s 15.83 Stafford (CA125/2018) v Accident Compensation Corp [2020] NZCA 164, [2020] 3 NZLR 731 at[33] per Gilbert J and [129]–[131] per Courtney J.84 NZPHDA, s 29(4).(b) Māori representation on advisory committees.85(c) The statutory functions of DHBs to:(i) develop processes to enable Māori to participate in andcontribute to strategies for Māori health improvement;86 and(ii) continue to foster the development of Māori capacity forparticipating in the health and disability sector and for providingfor the needs of Māori.87[240] The applicant says that s 4 of the NZPHDA did not limit Parliament's intentionin respect of the DHBs or limit decision-makers' duties to those found in pt 3.However, I accept the first and second respondents' submission that the expresswording of s 4 demonstrates that the Crown intended "to recognise and respect theprinciples of the Treaty" through the mechanisms provided in pt 3 of the Act. I acceptthe intention at the time the legislation was passed was that the Crown's Treaty'sobligations would be discharged primarily through the mechanisms in pt 3.[241] I am satisfied that Hauora Tairāwhiti was aware of the issues facing Māori inTairāwhiti. The specific decision to enter into the ICPSA with RX8 was made inaccordance with Hauora Tairāwhiti processes and was informed by a local Māorivoice, both at a governance and operational level. Accordingly, Hauora Tairāwhitiacted so as to discharge its obligations in respect of the Treaty principles.[242] In relation to HVDHB, its Pharmacy Contracting Policy required a Māorirepresentative on its evaluation panel. Ms Waldegrave was the representative ofHVDHB's Māori Health Unit on the evaluation panel for the Countdown application.In my view, the applicant's criticism of Ms Waldegrave as a "singular Māori" involvedin HVDHB's decision-making process, is a misstatement of the position. The purpose85 Sections 34–36.86 Section 23(d).87 Section 23(e).of the Māori Health Unit was to understand the perspective of local Māori. ThroughMs Waldegrave it had a voice on the evaluation panel.[243] To the extent that Te Pae Amorangi could be said to have created a legitimateexpectation, I am satisfied that expectation was met.[244] I am satisfied on the evidence that both HVDHB and Hauora Tairāwhiti diddischarge their Treaty obligations under the NZPHDA and, in entering into theICPSAs, did follow their own policies and processes (regardless of whether moremight be required of the Crown). As detailed above, those policies and processesallowed for each DHB to receive Māori-specific advice, including reflecting externalMāori views, both generally and in relation to the potential impact of the CountdownICPSAs on Māori equity.[245] I conclude that the fifth ground of review is not made out.Authority to make Treaty arguments[246] For completeness I note a preliminary issue which arose about the applicant'sability to make arguments on behalf of local iwi, who were not a party to theproceeding.[247] While they do not challenge standing, the first and second respondents refer toStudents for Climate Solutions Inc v Minister of Energy and Resources,88 where anissue was raised as to who could make arguments on behalf of local iwi, who were nota party to the proceeding and therefore not before the Court, in a judicial reviewapplication.[248] In that case the applicant challenged decisions by the Minister of Energy andResources to grant petroleum exploration permits to two companies. The grounds ofreview included that the Minister had not engaged with the principles of the Treaty ina meaningful way by taking into account the effects of climate change on Māori. Theapplicant was not affiliated with any iwi or hapū.88 Students for Climate Solutions Inc v Minister of Energy and Resources [2022] NZHC 2116, [2022]NZRMA 612 at [103].[249] The Court observed that it should be careful to not itself act inconsistently withthe principles of the Treaty by reaching decisions based on the views expressed by aparticular iwi (or other recognised body) without having them formally before it. Todo so might by itself be considered inconsistent with rangatiratanga and tikanga.89 Inaddition, reliance on the views of one iwi about matters within another iwi's rohe,without consideration of localised issues, is misguided.[250] Here, the ICPG is not affiliated with any iwi or hapū of the regions associatedwith HVDHB and Hauora Tairāwhiti and nor had the ICPG sought to obtain the viewsof those iwi or hapū in relation to the decisions under review.[251] The ICPG says it was not required to speak to iwi about what te Tiriti means— the DHBs, as the decision-makers, carried the obligation of ensuring they hadsufficiently informed themselves of the relevant facts to make their decision and,where required, had engaged in appropriate consultation.[252] Given my finding on the substance of this ground of review, it has not beennecessary for me to express a view on this issue.Monitoring[253] Under the fifth ground of review, the ICPG says that HVBHB and HauoraTairāwhiti were obliged to monitor the delivery and performance of the servicesprovided by Countdown Gisborne and Countdown Wainuiomata under the IPCSAs.[254] The applicant says that the monitoring obligation was of particular importancein relation to Countdown Pharmacy Gisborne because Hauora Tairāwhiti was awareof concerns raised by community pharmacists, including about the quality of servicesthat Countdown would provide.[255] The ICPG relies on the specific, comprehensive commitments made byCountdown Pharmacy Gisborne in its application for an ICPSA. The CountdownGisborne application for the ICPSA had represented to Hauora Tairāwhiti that all89 At [103]–[112].Countdown pharmacies are open from 9.00 am to 8.00 pm, seven days per week.Countdown Pharmacy Gisborne failed to meet those hours:(a) It failed to open on weekends, from at least October 2021; and(b) It failed to be open until 8.00 pm since at least October 2021.[256] The applicant says Hauora Tairāwhiti failed to monitor the delivery andperformance of services by Countdown Pharmacy Gisborne, including by failing tomonitor the extent to which it complied with its representations as to the services itwould provide.[257] The ICPG says that monitoring requires systematic, continuous, regularchecking of services that have been promised. Ad hoc communications betweenHauora Tairāwhiti and Countdown Pharmacy Gisborne, focussed on reduced openinghours because of problems staffing the pharmacy, did not discharge the general dutyto monitor performance.[258] The second respondent responds that the obligation to monitor, under s 25 ofthe NZPHDA, is an obligation to perform a function, in pursuit of its statutoryobjectives. The function was not a "general" monitoring obligation as the ICPGsubmits.[259] What was required was considering available information. The NZPHDA didnot prescribe how DHBs must seek and analyse that information. There was noobligation to audit providers on a regular basis, or by a particular means. The Act didnot require a "systematic, continuous, regular checking of services" as asserted by theICPG. Nor did the NZPHDA direct DHBs to take any action as a result of theirmonitoring.[260] Hauora Tairāwhiti says it did comply with its statutory obligations to monitorRX8's contractual performance. First, the ICPG is mistaken as to what thosecontractual obligations were, relying on the matters set out in RX8's application. Infact, it was not a term of the ICPSA that, for example, Countdown Pharmacy Gisbornemust operate from 9.00 am to 8.00 pm, seven days per week. RX8 did not breach anycontractual obligations by failing to do so.[261] Hauora Tairāwhiti did monitor RX8's performance under the ICPSA throughregular correspondence and hui, from the commencement of the ICPSA on 3 June2021, until the disestablishment of Hauora Tairāwhiti on 1 July 2022. After that dateTe Whatu Ora continued to monitor the ICPSA. Ms Roberts' evidence is that, in thecourse of that monitoring, she did not have any concerns that RX8 was not meeting itscontractual obligations or otherwise providing a good service.[262] The second respondent further submits that, in any case, if RX8 had breacheda contractual obligation it could be held to account for that breach under the ICPSA.It would not follow that Hauora Tairāwhiti had breached a statutory duty to monitor.Discussion[263] A specific monitoring duty in relation to service agreements arises unders 25(3) of the NZPHDA: "A DHB that has entered into a service agreement mustmonitor the performance under that agreement of the other parties to that agreement."One of the functions of DHBs under s 23(1)(i) of the NZPHDA is "to monitor thedelivery and performance of services by it and by persons engaged by it to provide orarrange for the provision of services".[264] Section 6 of the NZPHDA defines "monitor" in relation to the functionsspecified in ss 23(1)(i) and 25:(a) means to analyse on the basis of information provided under anyrelevant agreement and any other relevant substantiated information;and(b) includes assessing the timeliness of provision of information requiredto be provided under any agreement.[265] The ICPG's pleading and submission is that monitoring requires "systematic,continuous, regular checking of services that have been promised". I do not acceptthat proposition. The NZPHDA did not impose any procedural or substantiverequirement on DHBs in respect of monitoring and, as illustrated by Jeffries vAttorney-General,90 monitoring does not necessarily require a constant stream ofrequests.[266] The ICPG's pleaded claim was confined to allegations about monitoring ofopening hours. First, as noted, the opening hours were not a specific contractualobligation. The second respondent did in any event adduce evidence to address thoseallegations. Hauora Tairāwhiti and, subsequently, Te Whatu Ora, continued to monitorthe Countdown Gisborne Pharmacy appropriately, in the circumstances. Ms Roberts'evidence was that when the issues regarding staffing and opening hours were moresevere, in September 2022, more extensive monitoring was implemented.[267] In any event, as the respondents submit, any alleged failure to monitor cannothave any bearing on the validity of Hauora Tairāwhiti's decision to grant an ICPSA inthe first place.[268] I conclude that, on the facts, Hauora Tairāwhiti has discharged its monitoringobligations. This ground of review is therefore dismissed.Licence to operate a pharmacy — "effective control"[269] The sixth ground of review is that, when the Ministry granted licences to RX8to operate the Countdown pharmacies, it failed to administer the "effective control"test in s 55D of the Medicines Act in accordance with the statute.Medicines Act[270] The Medicines Act regulates the supply of therapeutic drugs to protect thesafety of the public. The Act prohibits (among other things) the operation of apharmacy otherwise then in accordance with a licence issued under pt 3. There is noright to such licences; their issue is strictly controlled by statutory criteria. For alllicences, the licensing authority must be satisfied of all the requirements in s 51(1).90 Jeffries v Attorney-General HC Wellington CIV-2006-485-2161, 20 May 2008 at [73]. Thedecision was unsuccessfully appealed to the Court of Appeal and Supreme Court.These include whether the applicant is a fit and proper person to hold the licence,91whether the applicant has sufficient knowledge of the obligations of a licensee and thehazards associated with medicines,92 that the premises and equipment are suitable,93and that there are adequate arrangements for adequate records in respect ofmedicines.94[271] Further criteria are also imposed on pharmacy operators. Under s 55A thelicensing authority must not grant a licence to operate a pharmacy unless it is satisfiedthat, in addition to satisfying the criteria in s 51(1), the applicant is also qualified underone of ss 55D, 55E or 55G.95 Section 55D applies in the case of RX8.[272] The relevant parts of s 55D provide:55D Restriction on companies operating pharmacies(1) No company may be granted a licence to operate a pharmacy unlessany of paragraphs (a) to (e) of subsection (2) apply.(2) A company may be granted a licence to operate a pharmacy if—(a) at all times more than 50% of the share capital of the companyis owned by a pharmacist or pharmacists, and effective controlof the company is vested in that pharmacist or thosepharmacists; orRX8's ownership structure[273] RX8's ownership structure, both now and at the time of its application to holda pharmacy licence for Countdown Pharmacy Penrose, is set out below.[274] RX8's shareholding is comprised of three shareholders who are registeredpharmacists (the Pharmacist shareholders), who hold 51 Class A shares (51 per centof the shares). General Distributors Ltd (GDL), which is wholly owned byWoolworths New Zealand Ltd, holds 49 Class B shares (49 per cent of all shares).91 Medicines Act, s 51(1)(b).92 Section 51(1)(d).93 Section 51(1)(e).94 Section 51(1)(f).95 Section 55A(1)(a).[275] RX8's Shareholders' Agreement and Constitution also provide (among otherthings):(a) The day-to-day pharmacy operations of pharmacies and any mattersrelating to legislation or regulation governing the operation ofpharmacies, are controlled or determined by the Pharmacistshareholders;(b) The Class B shares entitle GDL to receive 100 per cent of all dividendsand a 100 per cent share in the distribution of the surplus assets of RX8on liquidation.(c) RX8 shall have no more than two directors. The Pharmacistshareholders can appoint one director, and the GDL shareholder canappoint one director. Board decisions must be unanimous. TheChairperson does not have a casting vote.(d) A Class B director will have authority to enter into contracts of the typelisted in sch 5 of the Act (including, licences to operate and ICPSAs)but only after consent has been given by a Class A director to enter intothose agreements.The Ministry's decision[276] RX8 applied for a licence to operate a pharmacy in the Penrose Countdownstore on 21 May 2020. The application was assessed by MedSafe. Michael Haynes,the Medicines Control Manager of Medsafe, holds a delegation from the Director-General of Health as licensing authority for pharmacies under the Medicines Act.Mr Haynes assessed the RX8 application.[277] As it was the first time that RX8 had applied for a licence, a MedSafe Registrarassessed its legal structure against the statutory criteria under the Act. The Registrarrecommended the application be approved, meaning they were satisfied that RX8'sownership structure met the statutory requirements.[278] The only written record of the MedSafe Registrar's reasons for this decision isa Registrar Assessment Memo dated 21 May 2020. It records that the Registrarreviewed RX8's Constitution and Shareholders' Agreement, noted "Yes" on thequestion of majority pharmacist shareholder control of directors' meetings, notedmajority pharmacist board control to be "50%", and concludes "Negative control".The recommendation to approve the application was on the basis that "Pharmacistdirector must be present and resolution carried if unanimous (pharmacists havenegative control)."[279] This Registrar's memorandum was reviewed by Mr Haynes, who agreed thePharmacist shareholders have "negative control" and who was also satisfied theownership structure met statutory requirements.[280] As this was the first application for this specific premises to be licensed, aninitial licensing audit of the premises was conducted to assess compliance of theproposed premises with the regulatory requirements. The premises was assessed ascompliant.[281] The subsequent applications from RX8 for licences to operate pharmacies atGrey Lynn, Wainuiomata, Gisborne and Richmond included application forms andaccompanying materials that were materially the same, in relation to the issue ofeffective control. No reassessment of the ownership structure was conducted for eachsubsequent application made by RX8.[282] At the time of the hearing of this matter there were five licences granted toCountdown pharmacies, being Penrose, Grey Lynn, Wainuiomata, Gisborne andRichmond.Submissions[283] The ICPG says that effective control means that the Pharmacist shareholdersmust be able to make decisions relating to both governance and operational mattersfor the pharmacy company. However, on the basis of the company structure detailedabove, they cannot do so because GDL is able, through its appointed director, toprevent the pharmacy-appointed director from making any such decision if it choosesto do so.[284] In practice, "effective control" in s 55D must require the amount of control thatowning more than 50 per cent of a company would ordinarily provide under theCompanies Act 1993.[285] The applicant says that the relevant provisions of the Companies Act, takentogether, mean that the amount of control ordinarily expected of a majority shareholderis determinative control over ordinary shareholder decisions, including thecomposition of the board. This, in turn, must mean the ability to control the numberof directors required for directors' resolutions to be passed; there would be littlepurpose in controlling a minority of the board. That is what "effective control" overa company ought to require, at a minimum, for the purposes of s 55D(2)(a).[286] It then assesses the position of RX8 against that "default" position under theCompanies Act and concludes that the actual position in relation to RX8 is that thePharmacist shareholders do not have control over the board; they may appoint andremove only one out of two directors, with the other being appointed by GDL. Theydo not have control over the ability to hold shareholders' meetings, as quorum requiresGDL to be present. Board decisions must be unanimous; therefore, while thePharmacist shareholders effectively have a veto from their director, so too does GDL.The pharmacist-appointed director cannot make any decision without the approval ofthe GDL-appointed director.[287] If there is a deadlock between the two directors and that cannot be resolvedbetween the Pharmacist shareholders and GDL, the status quo remains; there is nooverriding mechanism in favour of the pharmacist shareholders. The GDL-appointeddirector is expressly permitted to act in the best interests of GDL, contrary to the bestinterests of RX8.9696 Clause 29.4 of RX8's Constitution provides: "Joint venture company: As the Company has beenincorporated to carry out a joint venture between the Shareholders, a Director may, whenexercising powers or performing duties as a Director in connection with the carrying out of thejoint venture, act in a manner which he or she believes is in the best interests of a Shareholder orShareholders, even though it may not be in the best interests of the Company."[288] The applicant says that the Pharmacist shareholders are subject to the interestsof GDL (ultimately Countdown) and cannot make (or cause to be made) anysignificant strategic or business decisions without GDL's permission.[289] In response, both the Ministry and RX8 rely on the concept of "negativecontrol" which they say is sufficient to establish effective control:(a) the Pharmacist shareholders have oversight and control of the day-to-day management of the pharmacies;(b) the Pharmacist shareholders have the ability to maintain the status quo,including to block any resolution or action that could or would becontrary to public safety or professional or ethical standards ofpharmacy practice; and(c) GDL is not able to effect change other than in situations where themajority Pharmacist shareholders also agree.[290] RX8 says the negative control test denotes an ability to block any resolution oraction that is contrary to public health and the specific operational requirements underthe Act. That interpretation is supported by s 5A(4) of the Medicines Act.97[291] RX8 also points to all of the licensing requirements imposed under s 51(1),which go to safety and other issues, set out at [270] above.[292] The Ministry notes that the Licensing Authority has been applying the negativecontrol test since at least 2008. It submits that the scope of a particular statutory poweris for the decision-maker's discretion and different approaches may be open. Providedthe decision-maker addresses itself to the right question and reaches a decisionreasonably open to it, the reviewing Court should not disturb its decision. Thatargument is supported by reference to the Licensing Authority's specialist function.97 Medicines Act, s 5A(4): " any covenant, condition, or stipulation in any contract oragreement restricting the operator of a pharmacy in the purchase of pharmaceutical requirementsor other stock in trade is to be treated as a device or arrangement affecting the management andcontrol of the pharmacy practice carried on in that pharmacy."The Ministry submits that where a public body exercises a specialist function thereviewing court should show deference to that technical expertise.[293] The intervener, the Pharmacy Guild, also addressed this ground of review. Itsubmitted that the meaning of "effective control" is an orthodox question of statutoryinterpretation for the Court, not a matter of discretion, as contended for by the Ministryand supported by RX8.[294] The Pharmacy Guild says the Court is not bound by the past, "negativecontrol", approach of the Licensing Authority. If that habitual practice reflects anincorrect interpretation of the statute, the Court should clarify the correct meaning.[295] In company structures, the orthodox definition of "control" of a companymeans to have majority control.98 This encompasses a positive power over theoperational performance of a company and the ability to make the company do as youwish. The ability to stop change (a veto), but not positively affect it, cannot be sensiblyseen as "effective", nor consistent with the statutory scheme.[296] RX8 emphasised what it says are the practical ways in which effective controlis achieved by the pharmacist shareholders. In response the Pharmacy Guild notedthat all 10 of the RX8 companies (at the time of the hearing) had three commonpharmacist shareholders. That means each would need to be having effectiveoperational control of 15 pharmacies. The Pharmacy Guild submits it is difficult tosee how this could allow for effective control of each pharmacy in any meaningfulsense.Legislative history[297] Counsel traversed the legislative history and context of the "effective control"requirement in some detail. All parties agreed that the statutory scheme is concernedwith public safety and the safe and effective delivery of prescription medicines. Thehistory of the provision shows that the ownership and control restrictions exist topreserve the independence of pharmacists from non-pharmacist interference.98 Companies Act 1993, s 7.[298] The Pharmacy Amendment Act 195499 introduced a partial consenting regimebased on a "one pharmacist, one pharmacy" principle, whereby individual pharmacistscould each operate one pharmacy without the consent of the Pharmacy Authority.[299] The 1954 amendment also allowed pharmacists to operate a pharmacy througha company without the need for consent, provided the pharmacists owned at least75 per cent of the shares of the company.100[300] The 1954 Amendment Act unintentionally left a loophole whereby pharmacistscould circumvent the "one pharmacist, one pharmacy" principle by owning shares inmultiple companies, each running pharmacies. The Pharmacy Amendment Act 1957addressed that gap, inserting a new subsection, subs 3(1A),101 which re-enacted the75 per cent ownership proviso.[301] The Pharmacy Amendment Bill 1957, as drafted, did not contain the "effectivecontrol" requirement. That was added to the Bill during the committee stage, after aMember of Parliament raised concerns during the second reading that the proposeddrafting would not achieve the intended purpose of "confin[ing] controlling interestsin chemists' shops to genuine practising chemists", due to the multitude of ways acompany could be structured to give control to a minority shareholder.102[302] Section 3(1A) remained in place until it was repealed and re-enacted ass 42(2)(a) of the Pharmacy Act 1970.[303] The Health Practitioners Competence Assurance (HPC) Act consolidated11 regulatory regimes relating to health professionals (including pharmacists) andrepealed the Pharmacy Act 1970. Parliament reintroduced blanket licensing for theoperation of all pharmacies in the Medicines Amendment Act 2003,103 but removedthe "one pharmacist, one pharmacy" model, expanding the number of permittedpharmacies per pharmacist to five.104 It reduced the pharmacist ownership99 Section 17(1).100 Pharmacy Amendment Act 1954, s 3(1).101 (23 October 1957) 314 NZPD 3008.102 (23 October 1957) 314 NZPD 3252.103 Medicines Amendment Act 2003, s 5.104 Section 17, inserting s 55F.requirement from at least 75 per cent to more than 50 per cent.105 This is now reflectedin s 55D(2)(a). The "effective control" requirement is retained.[304] Before the introduction of the HPC Bill, the Office of the Minister of Healthassessed two options in relation to ownership: restricted multiple ownership andlicensed open ownership — that is, allowing licensed non-pharmacists to ownpharmacies. The recommendation from officials to allow licensed open ownershipwas rejected by the Government. Rather, it enacted the 51 per cent ownershipthreshold. It appears, from the parliamentary debates, that the rationale for retaininga majority ownership requirement was to protect the safety of the public. Membersnoted that pharmacists, as health professionals, are driven by the needs of patients, andopen ownership by non-pharmacists risked compromising those standards for themaximisation of revenue.106Discussion[305] The first limb of the test in s 55D of the Act, that at all times more than50 per cent of the share capital of the company is owned by a pharmacist orpharmacists, is satisfied in the case of RX8.[306] The outstanding question is what is meant by "effective control". In my viewthis is a pure statutory interpretation question, albeit not a straightforward one. It is aquestion of law for the Court to decide the correct meaning of those words. TheMinistry's approach, to treat it as a matter of discretion for the decision-maker, is nodoubt relevant to the subsequent exercise of the decision-making power, but not to theprior question of what s 55D(2)(a) means.[307] Nor do I accept the Ministry's submission that, because the LicensingAuthority has taken a "negative control" approach for some time, the Court should behesitant to interfere with that approach. The Court is not bound by the practice of thedecision-maker when considering statutory interpretation of the relevant term. Ascounsel for the Pharmacy Guild noted, there have been many situations where the105 Section 17, inserting s 55D.106 See for example (15 October 2002) 603 NZPD (Martin Gallagher, Labour – First Reading ofHealth Practitioners Competence Assurance Bill).Court has clarified the correct meaning of a statutory scheme long after it was passedand in a way contrary to the habitual practice of the decision-maker applying thestatute.107[308] What s 55D requires is "effective control" of the company. As the PharmacyGuild submitted, the Licensing Authority has no particular expertise in companystructures, shareholding agreements or company constitutional arrangements. Thisalso militates against a suggestion that the Court should defer to any specialistexpertise of the Licensing Authority when interpreting the phrase "effective control".[309] As the applicant submits, three points follow from the wording of s 55D(2)(a):(a) What is required is effective control of the company — that is, RX8itself, not merely the pharmacy business or its day-to-day operations.(b) Effective control is to be vested "in that pharmacist or thosepharmacists" who own more than 50 per cent of the company — thatis, RX8 must be effectively controlled by the Pharmacist shareholdersspecifically, not any person who happens to be a pharmacist.(c) The conjunctive "and" between the majority ownership requirementand the effective control requirement means the requirement foreffective control is in addition to the majority ownership requirement,recognising that being a majority shareholder does not necessarilyamount to effective control of a company.[310] I accept that the "effective control" wording was added to the legislation toensure that the control that Parliament intended would be protected by the minimumshareholding provision could not be circumvented. That is, to ensure that the companywas there to serve independent pharmacists and not some outside interest and thus toprotect public safety.107 For example, in Booth v R [2016] NZSC 127, the Supreme Court determined the meaning of s 91of the Parole Act 2002, overruling the approach that the Department of Corrections had taken since2003.[311] There is no case law discussing effective control in the context of theMedicines Act.[312] As the Privy Council noted in Bermuda Cablevision Ltd v Colica Trust Co Ltd,the legislative context of the phrase "control" and "controlling interest" take theircolour from the context in which they appear. The expression is not a term of art.108[313] So, for example, in the context of the Proceeds of Crime Act 1991, Solicitor-General v Bartlett (subsequently referenced in other cases, including Solicitor-General v Huang109) discussed the meaning of effective control:110Effective control of trust propertyMeaning of effective control[24] With respect to the concept of effective control, the legislative intentexpressed in s 43(3) and (4) and s 29 of the Act suggests that the court is notto be limited in its inquiries by legal or equitable rights of ownership. Thisproposition derives support from the commentary on s 29 of the Actin Adams on Criminal Law – Sentencing (looseleaf ed), which statesat para PC29.01 that:"This section is intended to enable the Court to go behind anycorporate structure, trust, family relationship, or the like disguisingthe true and effective control of property by a particular person. Insuch situations, the Court is to determine whether particular propertyis to be treated as the property of offenders not by reference to theirlegal or equitable rights, but by reference to the degree to which theyare able to treat the property as their own: DPP v Walsh [1990] WAR25 (1990) 43 Crim R 266. In other words, as expressed in Connell vLavender (1991) 7 WAR 9, the question is whether the defendant infact has the power to regulate possession, use, or disposition of theproperty in question (that is, the de facto power to give or refuseconsent to a proposed course of action in relation to it)."[314] The Court then discussed Director of Public Prosecutions v Walsh111 andConnell v Lavender,112 and went on to conclude:113[27] These cases support the proposition that, when considering the issueof tracing the proceeds of crime, the court is entitled to consider the real,108 Bermuda Cablevision Ltd v Colica Trust Co Ltd [1998] AC 198 (PC) at 207.109 Solicitor-General v Huang HC Auckland CIV 2005-404-1538, 18 December 2007.110 Solicitor-General v Bartlett [2008] 1 NZLR 87, [2007] BCL 793 (HC) at [24]–[27].111 Director of Public Prosecutions v Walsh [1990] WAR 25; (1990) 43 Crim R 266 (WASC).112 Connell v Lavender (1991) 7 WAR 9, (1991) 5 ACSR 33 (WASC).113 Solicitor-General v Bartlett, above n 110, at [27].de facto position of the respondent in relation to the property. The intent is thatthe respondent should not profit from his crime purely because of the legalstructure by which he chooses to organise his assets. In order to determinewhether the respondent had effective control of the property, the court mustask whether in fact the respondent had the capacity to control, use, dispose ofor otherwise treat the property as his own.[315] The Health New Zealand website includes specific guidance about s 55D ofthe Act:114 The majority of the share capital must be owned by an individualpharmacist or pharmacists. This pharmacist or these pharmacists must haveeffective control of the company at all times. For example, this may bereflected by the classes of shares held (if applicable), the ability to appointdirectors to the board and the ability to control the board of directors to theboard.The Licensing Authority may require further information from the applicantto ensure that effective control is vested with the pharmacist(s). Companydocuments including company constitutions, shareholders agreements anddetails of the distribution of classes of shares (usually voting or non-votingrights) among the shareholders may be requested.(emphasis added)[316] What the case law and commentary illustrate is that various factors can berelevant to determining effective control of a company, including: shareholdingpercentages; the ability to appoint directors; the extent of control over decision-making at the board and shareholder levels; and day-to-day management of thecompany. There is an emphasis on the Court looking at the "real" picture.[317] I accept that a veto right may provide sufficient control in other legislativecontexts, where the control test is aimed at preventing some mischief associated withhaving control, as opposed to not having it. But those contexts are fundamentallydifferent from the Medicines Act context. They share a common theme, being aimedat preventing control from being too concentrated, in the interests of diversity.[318] Section 55D is aimed at the inverse. Its purpose is to prevent some mischiefassociated with a lack of pharmacist control. The Ministry's approach of "negativecontrol" would undermine the protective purpose of s 55D.114 Ministry of Health "Pharmacy ownership and control" (31 March 2011) <www.health.govt.nz>.[319] I also accept that the corollary of requiring effective control by pharmacists isthat there must not be effective control by non-pharmacists. Pharmacist control cannotbe jointly held with non-pharmacists. Control by a pharmacist that is shared with anon-pharmacist would not be "effective control", as required by s 55D(2)(a).[320] I do not accept the submission for RX8 that "effective control" is concernedprimarily with operational management and is therefore consistent with a "negativecontrol" test. While no doubt s 51(1)(d), (e) and (f) reinforce the public safetyrequirements of the Act, s 55D(2)(a) imposes an additional requirement. What it isrequired is effective control of the company, not just the pharmacy or its operationalrequirements. Pharmacist control over the bare minimum obligations required bylegislation does not satisfy effective control.[321] There are many active decisions required to be made at Board (and notoperational) level that can have an impact on the health and safety of pharmacypatients. Examples given by the applicant include contracting decisions, where theboard must agree to actively enter into a new contract. Many independent communitypharmacists provide optional services for the safety and well-being of the public.Examples include COVID care in the community contracts, whereby pharmaciesagreed to provide RAT tests, vaccinations and antivirals.[322] A further example is opening hours. Changes to normal pharmacy openinghours require board approval because they impact on the sustainability of the business.[323] Determinative power over the composition of the board, or at least over thenumber of directors that forms a majority of the voting rights on the board, ispractically necessary to meet Parliament's policy aim.[324] I conclude that the "effective control" test has not been administered inaccordance with a correct interpretation of the Act. I uphold this ground of review.[325] The primary remedy sought by the applicant is a declaration that the decisionsto issue RX8 with licences to operate pharmacies were unlawful and invalid, andorders setting aside the decisions and the licences. The Ministry on the other handsubmitted that if the Court gets to the question of relief, the decision should be remittedto the decision-maker. However, I agree with the applicant that, the Court havingfound there is no "effective control", the licences cannot stand.[326] I conclude that the licences granted by the Ministry of Health to RX8 to operatethe Countdown pharmacies were unlawful and invalid and an order should be made toset aside those licences.[327] I acknowledge that decision will have a significant impact on RX8, possiblyother pharmacy-operating companies, and the Ministry of Health itself, in terms of itsongoing role in granting pharmacy licences under s 55D of the Act. Given that, it isappropriate that the date on which the quashing order comes into force be deferred, toenable RX8 to consider its position and confer with the Ministry,115 and for theMinistry to consider the potential impact of this decision on any other licence holdersunder s 55D.Conclusion[328] In conclusion, I find that:(a) The decisions by each of HVDHB and Hauora Tairāwhiti to enter intoICPSAs with RX8 were commercial, contracting decisions andamenable to judicial review only on narrow grounds. The applicantdoes not allege fraud, corruption, bad faith or analogous circumstancesand therefore the first to third grounds of review must fail.(b) In any event, I would dismiss those grounds of review on the merits.(c) I dismiss the fourth ground of review in relation to te Tiriti/the Treaty.(d) I dismiss the fifth ground of review, against Hauora Tairāwhiti, inrelation to monitoring.115 See for example Winther v Housing New Zealand [2010] 3 NZLR 56 (HC) at [44]; and Austin vRoche Products [2021] NZSC 30, [2021] 1 NZLR 194 at [36]–[37], as to deferred orders.(e) I uphold the fifth ground of review, against the Ministry of Health, anddirect that the Ministry of Health and RX8 confer and file furthersubmissions, as to when the quashing order in relation to the RX8licences under s 55D of the Medicines Act should take effect.Submissions should be filed by four weeks from the date of issue ofthis judgment. Counsel have leave to apply if further time is required.Costs[329] Counsel should endeavour to agree on costs. If they are unable to do so,memoranda not exceeding five pages per party should be filed and served by fiveweeks from date of issue of judgment.AddendumDeclaratory Judgments Act 1908[330] After release of my judgment on 15 June 2023 counsel for the first and secondrespondents drew my attention to the fact that the judgment does not explicitly addressthe applicant's applications for declarations under the Declaratory Judgments Act1908. While it is implicit in the judgment that no such declarations will issue, forclarity and completeness I have recalled the judgment and reissued it with thisaddendum.116[331] In addition to relief under the Judicial Review Procedure Act 2016, theapplicant separately sought relief under the Declaratory Judgments Act 1908. Thedeclaratory relief sought related to the construction of the NZPHDA and the Pae OraAct, as those Acts related, or relate, to DHBs and Te Whatu Ora entering intoarrangements for the delivery of community pharmacy services.[332] My reading of the applicant's amended statement of claim117 is that thedeclarations sought were premised on the Court finding errors of law in the process116 See High Court Rules 2016, r 11.9; and Jessica Gorman and others McGechan on Procedure(looseleaf ed, Thomson Reuters) at [HR11.9.01(5)(a) and (b)].117 Amended Statement of Claim dated 11 July 2022 at [165]–[167] and [169].followed by HVDHB and Hauora Tairāwhiti in commissioning pharmacy services,and in monitoring the provision of those services, under the NZPHDA.[333] I have made no findings of error by HVDHB and Hauora Tairāwhiti in enteringinto or monitoring performance of the ICPSAs. It is therefore implicit that nodeclaratory relief as to how those bodies ought to have exercised their powers isrequired. In addition, the NZPHDA has been repealed and the DHBs have ceased toexist. In those circumstances, there is no basis on which it would be appropriate toissue declaratory orders, which might be characterised as "abstract" or "academic".118[334] The declarations sought regarding Te Whatu Ora's application of the relevantprovisions of the Pae Ora Act119 are different, in that the Pae Ora Act is currentlegislation and Te Whatu Ora a subsisting entity. But those declarations too appear tobe premised on a finding by the Court of errors of law: the amended statement of claimstates that it is in the public interest to grant a declaration as to how Te Whatu Orashould perform its function of commissioning pharmacy services under the Pae OraAct to ensure that errors of law are not continued under the new legal framework.120There were no such findings of error of law.[335] In any event, what is sought is essentially an advisory opinion about howTe Whatu Ora should exercise the very broadly framed statutory functions that wouldapply to contracting for community pharmacy services, divorced from specific factsand any current challenge. In my view it is not appropriate for the Court to entertainthat possibility.Gwyn J118 Earthquake Commission v Insurance Council of New Zealand Inc [2014] NZHC 3138, [2015] 2NZLR 381 at [133].119 Pae Ora Act, s 14(1)(b) and (c).120 Amended Statement of Claim, above n 117, at [169].